Non Resident Landlord Scheme

Non Resident Landlord Scheme

In the UK, if you're a non-resident landlord, you need to be aware of how your rental income is taxed. Here are the key things you should know:

1. Income Tax on Rental Income: If you're a non-resident landlord earning rental income from property in the UK, you're still subject to UK tax on that income. This applies whether you're a non-resident in the UK for tax purposes or simply live abroad but own property there.

2. Tax Rate: Rental income will typically be taxed at the same rates as if you were a resident. The rates can range from 20% to 45%, depending on how much income you earn. You can deduct allowable expenses, such as maintenance, repairs, and letting agent fees, before calculating the tax.

3. Non-Resident Landlord Scheme (NRLS): Under the NRLS, if you're a non-resident landlord, your letting agent or tenant may have to deduct basic rate tax (currently 20%) from your rental income before passing it on to you. The tax deducted is then paid directly to HMRC. If you want to receive your full rental income without deductions, you can apply to HMRC to have your tax liability dealt with through your Self-Assessment tax return.

4. Self-Assessment Tax Return: If you're not in the NRLS or you're not using an agent, you'll need to complete a Self-Assessment tax return to report your income and pay tax on it.

5. Capital Gains Tax (CGT): If you sell your UK property, you may be liable for Capital Gains Tax on any profit you make. Non-residents are subject to CGT on the sale of UK property, but this is subject to certain exemptions and reliefs, like Private Residence Relief.

6. Double Taxation: If you're paying tax on your rental income in another country, you may be able to claim relief under the double taxation treaty between the UK and your country of residence, so you aren't taxed twice on the same income

At SJM Properties, we are a member of the NRLS and have several Landlords already on the scheme, so we are well aware of how the scheme operates.