Did you know that landlords (including members of HM Forces posted overseas) for 6 months or more, who let out their UK property MUST register for the Non-Resident Landlord Scheme?
It is MANDATORY.
Your tax residence is still the UK, but your ‘usual place of abode’ is overseas.
But what does it mean?
It means that any letting agents or tenants must pay tax on your behalf, meaning you get paid the rent less the tax.
You can apply to HMRC to have the rent paid to you without the tax deducted, and then fill out your self-assessment as you would do in the UK, but this is only granted if your tax affairs are up to date.
In any eventuality, you will still need to complete the usual self-assessment for the rental income. If your tenant/letting agent has paid the tax for you, then they will need to give you a certificate showing how much tax has been paid – you use this for your self-assessment.
Don’t worry – there is no change to the tax you will owe for your rental property, it’s just the way in which it is collected that changes.
BUT if you don’t register and HMRC catchup with you, you could face a court appearance and a fine.
The property is jointly let – how does that work?
Each owner is treated as a separate landlord. Any owner who will be overseas needs to apply for the scheme. Even if the owners are Husband and Wife.
How do I know how much tax has been paid on my behalf?
The tenant or agent will give you a certificate at the end of the year to tell you how much tax they have paid for you.
How do I apply to have the total amount come directly to me?
You can apply online or with a postal form – here's the link
I am overseas but have a UK PO Box or ‘care of’ address – do I still need to register for the scheme
Yes – these types of address do not qualify and you as a person are still overseas.
When do I have to apply for the scheme?
Ideally within 30 days of the start of the tenancy.
I use someone to find my tenants, but then they pay me directly?
Anyone finding tenants for a Non-Resident Landlord doesn't have to withhold any tax on rents collected in advance for the landlord, providing:
Any fees for sourcing tenants are deducted direct from the rent collected.
The rent collected is for no longer than three months in advance and the tax due is less than £100.
How does the tenant/agent calculate how much tax to pay?
In short, they take the rent that they owe you, deduct any allowable expenses they have paid on your behalf, then work out 20% of that amount.
Minus expenses £200
Rent left owing £400
20% of that = £80 tax to pay.
*** This 20% is used regardless of your actual tax situation ***
As always, if your situation is more complicated that this, there will be a lot more to it. That’s when you need to read up on the rules or get some advice from someone who knows them already.
How can I find out more?
Call HMRC on 03000 516 644 or +44 3000 516 644 (if overseas) Mon-Fri, 08:30 - 16:00
Visit HMRC for more information, links, examples and forms!