Are You An Overseas Landlord?

Do you need to inform HMRC that you are overseas, even if you are a UK resident for tax?

When renting out a property in the UK, the rental income needs to be declared by law to the Inland Revenue, and tax will need to be paid if it is due.

On the subject of receiving rent whilst overseas, the Inland Revenue is very clear: if you live abroad for 6 months of the year or more, you’re classed as a ‘non-resident landlord’ by HM Revenue & Customs (HMRC), even if you’re a UK resident for tax purposes.

Letting Agents’ Legal Obligations

When letting property and collecting rents for non-UK resident landlords (NRL) i.e. landlords living overseas, the agent is obliged by the Income and Corporation Taxes Act 1988 and the Taxation of Income from Land (Non-Residents) Regulations 1995 to deduct tax (at the basic tax rate of 20%) to cover any tax liability.

This is unless the landlord has been authorised in writing by HM Revenue and Customs (HMRC) to receive rent gross. In order for tax not to be deducted at source and to avoid costly administration fees, we recommend all landlords complete an NRL1i form.

Failure to collect tax for the landlord could result in the agent being fined £5000.00.

Self Managing Landlords

If you don’t have a letting agent and your tenant pays you more than £100.00 a week in rent, the tenant will need to deduct the tax from their rent payments to you and pay it over to the Inland Revenue.

When Selling

You may also need to pay tax if you make a gain when you sell residential property in the UK. For further information, visit our blog: Non-Resident CGT Changes for Landlords

If you think this may affect you, do not hesitate to give our team a call on 01792 430100 and we will be happy to advise.