The Non-Resident Landlord Scheme

If you let UK property while living abroad, HMRC collects tax on the rent as it is paid, through the Non-Resident Landlord Scheme. Your letting agent, or in some cases your tenant, deducts tax from the rent and pays it to HMRC each quarter, unless HMRC has approved you to receive the rent in full. Either way, the rent is still taxable in the UK and still goes on a return.

This guide explains who counts as a non-resident landlord, how deductions are worked out, how to apply to receive rent gross on forms NRL1, NRL2 and NRL3, how Self Assessment works from abroad, and what changes when property income gets its own tax rates from April 2027.

Who counts as a non-resident landlord

The scheme turns on your "usual place of abode", not your tax residence, and the two are not always the same. GOV.UK says you are classed as a non-resident landlord if you live abroad for 6 months or more a year, even if you are UK resident for tax purposes. Landlords can be individuals, companies, trustees or partnerships.

Non-UK resident companies have paid Corporation Tax, not Income Tax, on UK property profits since 6 April 2020, and the scheme still applies to them.

How tax is deducted from your rent

Through a letting agent

A letting agent, for the scheme, includes anyone who manages property on behalf of a non-resident landlord. Agents must operate the scheme whatever the rent, unless HMRC has told them in writing to pay it with no tax deducted. They register with HMRC, then work through a simple sequence each quarter:

1. Add up the rent received in the quarter, including money paid to someone else at your request.
2. Deduct allowable expenses the agent paid for you in the quarter, such as its fees, insurance and repairs that are not improvements.
3. Multiply the result by the basic rate of Income Tax and pay it to HMRC within 30 days of the quarter end.

The scheme year runs from 1 April to 31 March, in quarters ending 30 June, 30 September, 31 December and 31 March. By 5 July each year the agent must send an annual report to HMRC and give you a certificate, form NRL6, showing the tax deducted. Keep it: it is your evidence of tax already paid.

Costs you pay yourself, such as mortgage interest, are not in the agent's calculation. They are dealt with on your return.

Through your tenant

If you have no letting agent and your tenant pays more than £100 a week, the tenant must register with HMRC, deduct the tax and pay it within 30 days of the quarter end. A tenant paying £100 a week or less does not have to, unless HMRC says so.

A worked quarter

A hypothetical example: rent of £1,200 a month gives £3,600 for the quarter. The agent pays £400 of its own fees and a £250 repair, leaving net rent of £2,950. At the 20% basic rate, the agent deducts £590 and pays it to HMRC. If the same quarter fell in 2027 to 2028, at the 22% property basic rate, the deduction would be £649. These are our calculations.

Receiving rent with no tax deducted

You can apply to HMRC to receive the rent in full: individuals on form NRL1, companies on NRL2 and trustees on NRL3. Each can be done online, or on a paper form posted to HMRC. If a tax agent is applying for you, the paper form is sent with form 64-8 authorising the agent.

• Approval. HMRC normally approves if the form is complete and correct and it is satisfied you will meet your UK tax obligations. It will not approve you if your taxes are not up to date.
• Companies. To use NRL2, the company must be incorporated outside the UK, have no UK place of business and not be UK resident for tax purposes. It becomes liable to Corporation Tax from the effective date.
• Notices. HMRC sends a notice of approval to you or your tax agent, and a separate notice to each named agent or tenant authorising them to pay without deduction.
• Effective date. Usually the first day of the quarter in which HMRC received the application.

Approval does not make the rent tax-free. It moves the timing of the payment from each quarter to your return.

Self Assessment from abroad

You must declare UK rental income on a Self Assessment return unless HMRC tells you not to, even if tax has been deducted. GOV.UK says non-residents cannot use HMRC's online services to report their income. The options are a paper return (SA100) with the residence pages (SA109), commercial software that supports SA109, or a tax professional.

Allowances and relief

• Personal Allowance. Living abroad, you get it if you are a British or EEA citizen, have worked for the UK government in the tax year, or the double taxation agreement with your country allows it. For 2026 to 2027 it is £12,570, and it must be claimed each year.
• Income Tax rates. 20% from £12,571 to £50,270, 40% to £125,140 and 45% above, the GOV.UK rates for England, Wales and Northern Ireland.
• Mortgage interest. Individual landlords cannot deduct it from rental profit. They get a tax reduction at the basic rate, worked out as 20% of the lowest of three amounts set by HMRC.
• Refunds. If your rental income is below your Personal Allowance and basic rate tax was deducted, you can claim it back on form R43.
• Double taxation. Where your country has a double taxation agreement with the UK, you can claim relief to avoid being taxed twice on the same income.

Estimate the tax on your rental profit with the landlord tax calculator.

Property income rates from April 2027

Section 7 of the Finance Act 2026 sets separate property rates of Income Tax for 2027 to 2028. HMRC's technical note says they apply in England, Wales and Northern Ireland and take effect from 6 April 2027.

For non-resident landlords, the technical note sets out three effects:

• the scheme's withholding rate becomes the property basic rate, 22%;
• relief for residential finance costs is given at the property basic rate of 22%; and
• landlords approved to receive rent gross keep filing returns as usual, and tax withheld is credited in the usual way.

Property income will be taxed after employment, trading and other income but before savings and dividends, and allowances, including the Personal Allowance, are set against other income first. If your only UK income is rent, the allowance still goes against it.

Practical points for overseas landlords

• Tell your letting agent you live abroad before the first rent is collected, so the scheme runs from the start.
• Keep every NRL6 certificate and the agent's statements with the property's records.
• Budget for net rent if tax is deducted, or for the 31 January payment if you are approved gross.
• If you move back to the UK, the scheme stops applying once your usual place of abode is here, so tell your agent.

PROXERA Wealth coordinates letting and day-to-day management for buyers abroad, through one handover. PROXERA keeps the rent, costs and documents for each property in one account, which is the information your return draws on. Read how the purchase itself works in buying UK property remotely, how mortgage interest is assessed in expat mortgages, or start from our overseas investors page.

Country guides set out the tax treaty, currency and time difference for where you live: Hong Kong, the UAE, Singapore, Nigeria, the USA, India, Saudi Arabia, Qatar, Kuwait, Malaysia, China, Kenya, Ghana, South Africa, Canada and Australia.