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Non Resident Landlord
Property Tax Compliance
Our specialist tax accountants work directly with HMRC to secure the best possible outcomes for you. With a tailored, client-focused approach, we take the stress out of tax compliance and help you manage complex regulations with confidence and clarity.
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Non Resident Landlord
Being a non-resident landlord comes with unique tax obligations. Even if tax is withheld under the NRLS, landlords must declare rental profits in a Self Assessment return. Deductions like repairs, management fees, and mortgage interest are still allowable. Companies pay Corporation Tax instead of Income Tax. Double taxation treaties may offer relief in the landlord’s home country. With clear guidance and timely filing, landlords can remain compliant while maximising after-tax income.
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The Non-Resident Landlord Scheme (NRLS) applies to property owners living abroad who receive UK rental income. HMRC requires letting agents or tenants to deduct basic rate tax before passing on the rent. However, landlords can apply to receive gross payments by submitting an NRL1 form. This ensures compliance while allowing the landlord to file UK tax returns annually. The NRLS helps HMRC secure revenue from overseas investors in the UK property market.
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What is the Non‑Resident Landlord Scheme (NRLS)?
The Non-Resident Landlord Scheme (NRLS) ensures that UK tax is collected from landlords who live abroad for more than six months but still receive rental income from UK property. Under this scheme, letting agents or tenants must deduct basic-rate income tax (currently 20%) from rent payments and send it to HMRC.
However, non-resident landlords can apply to receive rental income without tax being deducted at source. This is done by submitting the appropriate form to HMRC and requesting approval for gross rental payments. Once approved, the landlord is still required to file annual UK tax returns to declare rental income and pay any tax due.
The NRLS applies to individuals, companies, and trusts based overseas. It is designed to ensure compliance by non-residents with UK tax rules on property income. Whether you rent out a single flat or hold multiple UK properties through a corporate structure, understanding the NRLS is crucial. Applying for gross payment status can improve cash flow and simplify your finances, especially if you’re managing property from abroad. Failure to register correctly could result in withheld payments and penalties, so early action is essential.
How do I apply for gross payment status under NRLS?
To receive UK rental income without tax deducted at source, non-resident landlords must apply for gross payment status through HMRC. Individuals use a specific form to declare their overseas residence and commit to meeting UK tax obligations. Companies and trusts must complete separate versions tailored to their structure.
Approval depends on showing that your tax affairs are in order. HMRC may require proof of tax returns submitted in previous years or evidence that no tax is due. Once approved, letting agents and tenants will be notified and can stop deducting tax from your rent. This status is ongoing but may be revoked if you fail to keep up with UK tax obligations.
Receiving rent gross does not exempt you from paying UK tax—it simply allows you to manage payments yourself rather than having them withheld upfront. You still need to complete a self-assessment tax return or Corporation Tax return, calculate profits, and pay any tax due by the normal deadlines.
Applying for gross status early, ideally before entering into a tenancy agreement, can simplify cash flow and provide more flexibility in managing your UK rental income from overseas.
Do non-resident landlords need to file UK tax returns?
Yes, non-resident landlords are required to file UK tax returns if they receive income from UK property. Individuals must register for self-assessment and file a return that includes details of rental income, allowable expenses, and any tax already paid through the NRLS. This ensures that your total tax liability is calculated accurately.
For companies, a Corporation Tax return must be submitted annually. Even if rent is paid gross due to NRLS approval, the obligation to declare rental profits remains. Landlords must also pay any additional tax due after accounting for reliefs and expenses.
It’s important to maintain proper records of rental agreements, payments, expenses, and any communication with letting agents. Filing a return also allows you to claim tax relief or credit for expenses such as property maintenance, insurance, and letting agent fees.
Missing your tax return deadlines can lead to penalties and interest. Non-resident landlords are encouraged to use professional tax services to ensure accuracy and compliance, especially when dealing with cross-border tax obligations and property portfolios held via overseas entities or trusts.
What expenses can I deduct from UK rental income?
Non-resident landlords can deduct a range of legitimate expenses from their UK rental income to reduce their taxable profit. Allowable expenses include property maintenance and repairs, letting agent fees, insurance premiums, service charges, council tax (if paid by the landlord), utility bills, and interest on buy-to-let mortgages.
For residential property, mortgage interest relief is restricted to the basic rate of tax. For companies, however, full interest relief is usually available under Corporation Tax rules. Additional reliefs may be available for capital improvements and capital allowances on certain fixtures, particularly for furnished holiday lets or commercial properties.
These deductions must be genuine, incurred wholly and exclusively for the purpose of renting the property and properly documented. Retain all invoices, contracts, and payment records to support your tax return. Incorrectly claiming expenses or failing to claim legitimate deductions can result in overpaying tax or HMRC enquiries. Accurate record-keeping and professional advice ensure you pay only what is due and remain fully compliant with UK tax law while managing property from overseas.
Can I offset UK tax against tax paid abroad?
If you pay tax on your UK rental income in both the UK and your home country, you can get relief from double taxation. This relief helps you avoid being taxed twice on the same income.
To claim this relief, report your income on your UK Self Assessment or Corporation Tax return. You’ll also need to show proof of the foreign tax you paid on that same income. The relief you can claim is usually the lower amount between the foreign tax paid or the UK tax you would owe on that income. You cannot claim relief for income that is exempt in the UK or if a tax treaty gives the right to tax only to one country.
This relief system works best if your home country has a tax treaty with the UK. However, if there isn’t a treaty, you can still get unilateral relief under UK tax rules. It’s important to keep tax documents from both countries to support your claim.
Using double taxation relief correctly can help lower your overall tax bill. But if you make mistakes in your claims or don’t keep good records, you could face penalties. It’s a good idea to get professional help when dealing with tax issues across countries.
How are non-resident companies taxed on UK property?
Non-resident companies earning income from UK property are subject to UK Corporation Tax. Since 2020, these companies are no longer taxed under the income tax regime for non-resident landlords. Instead, they must register for Corporation Tax, keep full accounting records, and file annual tax returns with HMRC.
Rental income is treated as part of the company’s trading profits, and expenses such as repairs, management fees, insurance, and loan interest can be deducted. Corporation Tax rates currently vary based on profits, with larger companies paying higher rates. Non-resident companies must also report and pay tax on any gains from selling UK property. They must submit returns and make payments within set deadlines, even if no tax is due due to exemptions or losses.
Additionally, companies holding residential property worth more than a specified threshold may be subject to Annual Tax on Enveloped Dwellings (ATED) and may need to file ATED returns, even if reliefs apply. Proper registration, tax compliance, and understanding of UK property tax rules are essential to avoid penalties and maintain full legal standing.
What is the Register of Overseas Entities and what changes apply from July 2025?
The Register of Overseas Entities (ROE) requires non-UK companies, trusts, or legal entities that own property in the UK to register with Companies House and reveal their beneficial owners. This helps increase transparency and stop anonymous ownership of UK real estate.
Starting July 2025, new rules will require overseas entities to update their information each year. They must also report any changes in beneficial ownership that happened during their initial registration period, which includes ownership from early 2022. This new reporting requirement adds more responsibilities for overseas property holders.
Entities that do not comply may face fines, be blocked from buying, selling, or leasing property in the UK, and might have their entity ID suspended, making property transfers impossible until they fix the issue.
To stay compliant, overseas companies must have their beneficial ownership information checked by a UK agent and submitted to Companies House on time. It is important to keep accurate records and have legal support, especially when ownership involves trusts, nominee structures, or cross-border entities.
What are the CGT rules for non-resident landlords?
Non-resident individuals and companies must pay UK Capital Gains Tax (CGT) or Corporation Tax on profits from selling UK property. Individuals must report the sale within 60 days of completion and pay any tax due within the same period. Companies report the gain through their Corporation Tax return.
Since 2015 for residential and 2019 for commercial property, non-residents have been liable for CGT on UK disposals. The tax is calculated based on the difference between the sale price and either the purchase price or a rebased value from the date the property became taxable (e.g., April 2015 or April 2019, depending on the property type).
You can deduct legal fees, estate agent costs, and certain capital improvements from the gain to reduce your liability. If you are temporarily non-resident and sell a property within five years of leaving the UK, special rules may treat the gain as taxable in the year you return. It’s essential to get accurate valuations, keep detailed records, and consult our tax adviser—especially when selling from abroad—so you meet deadlines and optimise tax reliefs.
How does overseas company or trust ownership affect compliance?
UK properties held via overseas companies or trusts are still fully within the scope of UK tax and regulation. Ownership through these structures does not avoid the need to comply with Corporation Tax rules, CGT obligations, or disclosure under the Register of Overseas Entities.
If a trust owns UK property, the trustees are responsible for filing UK tax returns and may need to register with the Trust Registration Service (TRS). If the trust generates rental income or disposes of UK property, it must comply with income tax or CGT requirements just like an individual or company.
For companies, UK rental profits are taxed under Corporation Tax rules, and ownership details must be reported to Companies House via the ROE. Non-compliance can trigger penalties, restrictions on land registration, and reputational risks.
International landlords using offshore structures should ensure full transparency and accurate reporting. In many cases, such structures are under greater scrutiny following global tax reform and transparency initiatives. Legal and tax professionals can help ensure your structure remains compliant, efficient, and fit for purpose under the latest UK regulations.
What happens if I don’t comply with NRLS or ROE rules?
Failure to comply with the Non-Resident Landlord Scheme (NRLS) or the Register of Overseas Entities (ROE) can have serious legal and financial consequences. Under NRLS, if you don’t register or file tax returns, HMRC may issue fines, charge interest, or deny you gross payment status—meaning agents or tenants must deduct tax at source.
For the ROE, not submitting or updating beneficial ownership information can lead to penalties, including daily fines, legal enforcement, and freezing of property transactions. Without a valid Overseas Entity ID, the Land Registry will not allow you to sell, lease, or transfer your UK property.
Non-compliance can also raise red flags with HMRC and Companies House, possibly triggering further investigations into tax evasion or money laundering risks.
These regulations aim to ensure transparency and fair taxation, and the UK authorities have increasing access to international data. As a non-resident landlord, staying proactive, maintaining accurate records, and seeking professional support are essential to avoid unnecessary costs and protect your investment.