We have written previous blogs regarding the non-resident landlord scheme which applies to any landlords who live abroad for more than 6 months a year, even if you are a UK resident for tax purposes. If you rent out a property in the UK you need to pay tax on your income, and if you want to be able to receive your rent in full each month and pay tax at the end of the year when you submit your Self-Assessment tax return, you need to complete an NRL1i form and send it to HMRC for approval.
We have become aware that the Wealthy and Mid-Sized Business Compliant unit at HMRC are writing to individuals living in properties registered as owned by overseas companies. This is in order to ensure that they have considered whether they should be deducting tax from their monthly rental payments. Even if the landlord has completed an NRL1i form and been approved by HMRC to receive gross rent, and HMRC have written to the tenant in order to confirm that this is the case, they are still contacting tenants asking them to register with HMRC and submit an annual report (if they rent directly from the landlord without going through an agent). This report asks the tenant to provide information regarding topics including rental payments (both value and frequency), when tenancy began, who rent is being paid to and if they have any connection with the property owner.
It therefore seems that HMRC are increasing their efforts to identify overseas companies that are not yet registered under the non-resident landlord scheme. This is also due to changes being implemented in April 2020 which will mean that non-resident companies with UK property income will be taxed under the UK corporation tax regime rather than being charged UK income tax.
At FKGB Accounting we can assist any landlords or tenants unsure about their tax responsibilities or appropriate response to HMRC correspondence. Please contact us to find out more.
