You need to pay tax on your rental income if you rent out a property in the UK.
If you live abroad for 6 months or more per year, you’re classed as a ‘non-resident landlord’ by HMRC – even if you are a UK resident for tax purposes.
How you pay tax
You can get your rent either:
· in full and pay tax through a Self Assessment tax return – if HMRC allows you to do this
· with tax already deducted (20%) by your letting agent or tenant
Get your rent in full
If you want to pay tax on your rental income through Self Assessment, you need to fill in form NRL1i, and send it back to HMRC.
If your application is approved, HMRC will tell your letting agent or tenant not to deduct tax from your rent and you’ll need to declare your income in your Self Assessment tax return.
HMRC will not approve your application if your taxes aren’t up to date, for example you’re late with your tax returns or payments.
Get your rent with tax deducted
Your letting agent or tenant will:
· deduct basic rate tax (20%) from your rent (after allowing for any expenses they’ve paid)
· give you a certificate at the end of the tax year saying how much tax they’ve deducted
If you don’t have a letting agent and your tenant pays you more than £100 a week in rent, they’ll deduct the tax from their rent payments to you.
If you’ve paid too much tax
You can ask for a refund if both:
· your rental income is lower than your personal allowance
· your letting agent (or tenant) already deducted basic rate tax on it
You will need to fill in form R43 and send it back to HMRC.
You can’t ask for a refund if you’re not eligible for a personal allowance.
Companies and trusts
A company is a ‘non-resident landlord’ if it receives income from renting UK property and either:
· its main office or business premises is outside the UK
· it’s incorporated outside the UK
Your company will get its rent in full if it’s resident in the UK for tax purposes – this includes UK branches of companies based abroad if they’re registered for Corporation Tax.
A trust is a ‘non-resident landlord’ if it receives income from renting UK property and all trustees usually live outside the UK.
Apply to get your rent in full
Companies should use form NRL2i to ask HMRC to get rental income in full.
Trusts should use form NRL3i.