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If your landlord lives outside the UK

If your landlord lives abroad for more than 6 months of the year, then they must pay tax on any income which they receive from renting properties in the UK. This can either be paid by the letting agent, or the tenant.

Paying Tax:

You need to contact HM Revenue and Customs (HMRC), if your landlord lives outside the UK and you pay £100 or more a week in rent directly to them. You can register here

You may have to deduct tax from your rent under HMRC’s ‘non-resident landlord scheme.

If you pay a representative of your landlord who is a UK resident, such as a friend or family member, who isn’t a registered letting agent then you will still need to register with HMRC.

You may not need to deduct the tax in all cases, as HMRC may write to you and confirm that the landlord can receive the rent without tax deductions. However you must still register with HMRC and complete an annual report.

What you need to do:

1. Register with HMRC within 30 days of becoming a tenant.  Tenants need to contact HMRC and provide some basic information, they can be contacted here

2. Work out and pay the tax (within 30 days of the end of each tax quarter), for any issues working out the tax, contact HMRC.

3. A NRL form needs to be completed by the HMRC and the landlord will both need a copy by 5th of July of each year.

4. The landlord will also need a  NRL6 Certificate by 5th July each year.

5. Keep records of all correspondence and any payment relating to the property (rent, invoices, expenses) for 4 years.

How to work out and pay tax:

  • Add the total of 3 months rent.
  • Deduct any deductible expenses you paid in the quarter
  • Multiply the total by the basic rate (often 20%)

(HMRC may check that you have paid the right amount and interest may be charged on late payments.)

Example

Ann pays £500 a month (£500 x 3 = £1500), from 30 June till 30 September she also paid:

£200 for roof repairs (expense paid by the letting agent)

£100 to pay off the landlord’s loan

£1,200 direct to her landlord in rent

Because the plumbing repairs are a deductible expense they are not included in the calculation of the taxable amount.

The tax is paid on £1,300 at the basic rate of 20% – a payment of £260 is due to HMRC.

Ann has the right to recover this money from rent payments or other money owed to the landlord.