The ‘Non-Resident Landlord Scheme’ (NRLS) is a scheme for taxing the UK rental income of non-resident landlords. Under the scheme basic rate tax (20%) is deducted from the net rent collected by an agent (less expenses paid). There is an exception to this where an agent/tenant has authority from HMRC to pay the landlord gross.
If there is no agent involved then it is the tenant who deducts the tax and pays this to HMRC pay over to HMRC.
A NRL is defined as someone (individual, company or trustee) who receive UK rental income with a ‘usual place of abode’ outside the UK. For the purposes of the scheme the ‘usual place of abode’ for a landlord is determined by an absence from the UK of 6 month or greater. It is thus possible for a person to be tax resident in the UK yet, for the purposes of the scheme, to have a ‘usual place of abode’ outside of the UK.
For rent to be paid gross an application must be made to HMRC using form NRL1. The form can be completed online or using the postal version. HMRC will formally approve the application where they are satisfied that the applicant’s UK tax affairs are up-to-date or that the rental income will be non-taxable (e.g. where covered by personal allowances).
On receipt of the ‘Notice of Approval’ tax is not to be withheld and a tenant will not be required to make any returns post the date of approval. An agent will have to submit an annual return but will not be required to submit the usual quarterly returns.
If your circumstances reflect the above or may do in the future then get in touch with us.
