Non-resident landlord scheme explained

If you live abroad and let UK property, your letting agent or tenant must deduct basic rate tax from the rent unless HMRC has approved you to receive it gross. Approval does not remove the tax; you still report the rental profit to HMRC and pay what is due.

Landlords whose usual place of abode is outside the UK, which HMRC generally reads as absence for six months or more. It applies to individuals, trustees and companies, and it applies whether or not you are non-resident for wider tax purposes.

Where a letting agent collects the rent, the agent deducts basic rate tax from the rent after certain allowable expenses and pays it to HMRC quarterly. With no agent, a tenant paying more than the published weekly limit has the same duty. You receive a certificate showing what has been deducted.

You can apply to HMRC for approval to receive rent without deduction. Approval is given where your UK tax affairs are up to date and you undertake to keep filing. It is a cash-flow change only. Rental profit remains taxable and the return still has to be filed.

A Self Assessment return reporting the UK property profit, claiming the tax already deducted. Property held through a company follows the corporation tax route instead. Mortgage interest is restricted to a basic rate tax reduction for individuals, which is what usually makes the company comparison worth running.

Rates, thresholds and deadlines quoted here reflect the current UK position and current HMRC and Companies House guidance. Check GOV.UK, or ask us, before relying on them for your own business.