The Non Resident Landlord Scheme

I have recently taken employment abroad, and due to the fall in house prices I am going to rent out my home in the UK rather than sell. I have not engaged a letting agent to act for me as I know the tenant, and they will be paying the rent directly to me whilst I am abroad. Are there tax implications I should be aware of on this rental income?

1st May 2009

If a tenant pays rent of more than £100 a week (£5,200 per annum) to a non-resident landlord they must deduct basic rate tax from the landlordís UK rental income and pay the tax to the Inland Revenueís Accounts Office, Cumbernauld. Tenants who pay rent of £100 a week or less do not have to operate the scheme unless they are told to do so by HM Revenue & Customs. When working out the amount to tax, the tenant can take off tax deductible expenses that are incurred for the purposes of letting the property.

However, you can apply as the landlord on form NRL1 to the Centre for Non Residents for approval to receive your rental income gross. This is usually given if your tax affairs are up to date or you do not expect to be liable to UK income tax for the tax year. You will still however need to include this information on a UK self assessment tax return if you are sent one. For further information on the landlords and tenants responsibility see the information on www.hmrc.gov.uk/cnr website or contact your local TaxAssist Accountant.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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