Non resident landlord services

Published: 16 Nov 2011

Updated: 20 Aug 2013

 

Written by Ray Coman

 

Most people who are not resident in the UK are not liable to UK tax and do not have to complete a tax return. The most common exception to this rule is landlords who let properties in the UK.

 

Non resident landlord services The default position is that a non-resident landlord is required to have basic rate tax deducted at source from gross rents. Where the property is managed by a letting agent, the agent is legally responsible for withholding the tax at source and paying this over to HMRC. If the property is not managed by a letting agent, the tenant should be withholding tax from the rents due.

For the landlord, the drawback of the above system is that tax is deducted from gross rents. Therefore, tax collected is on the income before deduction of expenses, like mortgage interest. Furthermore, the majority of non-resident landlords are entitled to a personal allowance under the Double Taxation Agreement between the country they are resident in and the UK. The implication is that it is possible to pay considerably more tax than required.

 

A non-resident landlord is required to complete a UK Tax Return, the same as UK resident landlords. A Tax return will calculate the tax liability and account for tax deducted at source.

 

The landlord can apply to receive rents without deduction of tax at source. This process, known as the non-resident landlord scheme, could provide a distinct cash flow advantage.

 

Coman & Co. are here to help. We have dealt with many non-resident landlords. We can assist with applications to have rents deducted gross, complete your UK Tax Return and advise on the best ways of minimising tax and avoiding penalties. Our document exchange facility will also allow you to approve Tax returns online without the requirement for a physical signature.

 

Please contact for a telephone appointment.

Comments  

#6 Raphael Coman 2020-09-19 21:33
Sonia,

It is your letting agent that withholds the tax and pays it over to HMRC.

Please forward the non-resident scheme approval letter to your letting agent. Your letting agent are then obliged to stop withholding tax at source from your pay. Typically, in my experience the letting agent will then refund any tax withheld at source since the start of the tax year.

Therefore the sooner you send the approval letter to your letting agent the sooner you should obtain your Tax Return.

Any amount of tax that you have not been refunded by the year end can be included in your Tax Return.
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#5 Sonia Simon Losada 2020-09-10 02:27
Thanks. I applied for the exception, but it was approved after HMRC took the 20 per cent. My query is: Can I get that money back now or do I have to wait until next year when I do my tax return?
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#4 Raphael Coman 2020-09-09 20:59
Dear Sonia,

You are required to file a Tax Return every year. UK tax on rental profits is 20%. This applies for profits up to the higher rate tax threshold (£50,000 at the time of writing.) The 20% deduction at source takes place if you are not registered for the non-resident landlord scheme. I would therefore advise that you complete an NRL1 form. Unless you are behind on your taxes HMRC will approve you to join the non-resident landlord scheme. Give your reference number to your letting agent who will then stop deducting taxes at source.

The 20% is applied to gross rents. However, typically you can deduct costs from taxable rental profits such as letting agent fees, repairs and building insurance. There is also tax relief for mortgage interest payments.
https://comanandco.co.uk/taxation-of-interest-on-rental-property

Therefore even if you do not join the non-resident landlord scheme, you will quite likely be entitled to a tax refund when you file a Return.

Many non-residents are entitled to a UK personal allowance. This would further exempt you from tax and increase any repayment of tax withheld at source. https://comanandco.co.uk/uk-personal-allowance-for-non-residents
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#3 Sonia 2020-09-07 06:17
Good morning

I would like to check if there is any way to claim back the taxs hold by HMRC as I am NON RESIDENT LAND LORD. HMRC took around 20 per cent of the rent paid to me by my tenant. I applied for an exception but it arrived after the agency sent the money to HMRC.

Thanks
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#2 Ray Coman, FCCA, CTA 2015-11-10 16:57
Dear Sirs,

I would be please to provide you with a quotation. Please email:

Ray Coman, FCCA, CTA, Director
Coman & Co. Ltd.
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#1 Wavy 2015-11-09 07:01
Dear Sir/Madam,

Good morning.
I am buying a buy-to-let property in the UK and the transaction will be completed on the early December this year. Thus, I am looking for an experienced tax accountant to help with tax advice and handle the UK Tax Return and related issues. Grateful if your company would provide me a quotation on the non-resident landlord services stating what services included.
Thank you for your time and look forward to hearing from you.

Cheers,
Wavy
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