The Non-resident landlord (NRL) scheme is a special scheme for the UK rental income of non-resident landlords. This includes companies or trustees whose ‘usual place of abode’ is outside the UK. HMRC classifies a person living abroad for 6 months or more per year, as a non-resident landlord. Interestingly, this is the case even if the person is a UK resident for tax purposes.
Generally, basic rate tax (currently 20%) must be deducted, after expenses, from the rent payable to a non-resident landlord, either by the letting agent or where there is no letting agent by the tenants (unless the rent is minimal) and the tax paid over to HMRC within 30 days of the end of each tax quarter.
By using the NRL scheme, a non-resident landlord can apply for approval from HMRC to have any rents paid with no tax deducted. HMRC can refuse an application if it is not satisfied that the information provided by a non-resident landlord is correct or where there are concerns that the landlord will not properly comply with their UK tax obligations.
Planning note
HMRC no longer send copies of the non-residents landlord scheme annual return form by post. Instead, the form known as the Annual Information Return (NRLY), is available on GOV.UK and should be submitted online or sent by post if online submission is not an option. The annual return for 2017-18 is due to be submitted by 5 July 2018.
If you are a non-resident landlord and would like assistance with completing the various returns or applications, please call.
