Tax implications of being an overseas landlord

Property News, Accountants & Bookkeepers October 19th, 2017
Tax implications of being an overseas landlord

Arthur takes a look at the NRL tax involved if you are a landlord receiving rent while living overseas and the implications of this.

Have you heard of NRL tax before? Non-Resident Landlord Scheme (NRL) tax is the tax agents/property managers must send to HRMC on behalf of their non-resident landlords.  This is deducted from the property owner remittances.  This scheme is operated by the Centre for Non-Residents (CNR) and this applies to landlords who have lived abroad for over 6 months.

Factors to take into account are if a tenant pays the rent to their landlords bank account directly, they must deduct tax unless they pay under £100 a week or they have permission from the HRMC’s Centre for Non-residents for payment to be set gross.

The agent or tenant must send payment to the HRMC on a quarterly basis and included, a report with these deductions to the HRMC along with a Tax Liability certificate to yourself each year.

How to register

You must apply for NRL1 form  by visiting www.hmrc.gov.uk if you wish to register as a Non-Resident landlord and receive gross rental income.  Confirmation, if approved, is then sent to your agent or tenant and so they will be able to directly pay your gross income.  You must have an approval for each individual agent/tenant you use if they are paying you directly.  Alternatively, if you wish to receive rent with this tax deducted, you must inform your tenant to register with the HRMC and take the tax from your income before sending the payment directly into your bank.  Again, this can be done via the website www.hmrc.gov.uk.  

Are you suitable for approval?

It is unlikely you will be approved if you have a poor tax history or your UK tax affairs aren’t up to date!  You can apply for approval if you do not expect to be liable for UK Tax to begin with or you don’t have any UK tax obligations.

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