Overseas Landlords

Overseas Landlords

The Inland Revenue’s Non Resident Landlord Scheme is a scheme for taxing the rental income of landlords who are resident overseas for tax purposes. The scheme requires UK letting agents to deduct Basic Rate tax (currently set at 22%) from any rent they collect for non-resident landlords.

Non-resident landlords are persons (including individuals, companies and trustees) who have UK rental income, and a ‘usual place of abode’ outside the UK.

If non-resident landlords don't have UK letting agents acting for them, and the rent is more than £100 a week, their tenants must deduct the tax. When calculating the amount to tax to deduct, the letting agent/tenant can take into account any deductible expenses incurred within a given quarter.

Non-resident landlords who are eligible can apply at any time for approval to receive their UK rental income with no tax deducted. When approval has been given, HM Revenue & Customs sends

1. a notice of approval to receive rent with no tax deducted to the non-resident landlord, and
2. a separate notice to the letting agents or tenants named on the application form authorising them to pay rent to the non-resident landlord without deducting tax.

Letting agents and/or tenants don't have to deduct tax if HM Revenue & Customs (HMRC) tells them not to. HMRC will tell an agent/tenant not to deduct tax if non-resident landlords have successfully applied for approval to receive rents with no tax deducted. But even though the rent may be paid with no tax deducted, it remains liable to UK tax. So non-resident landlords must include it in any tax return HMRC sends them.

For full details on all the regulations and forms, visit the HM Revenue and Customs web site.