Non-Resident Landlord Scheme: Renting Out UK Property From Abroad

If your usual home is outside the UK and you let out UK property, the Non-Resident Landlord Scheme (NRLS) requires your letting agent — or in some cases your tenant — to deduct basic-rate tax at 20% from your rent and pay it to HMRC each quarter. You can apply on form NRL1 to be paid the rent in full instead, but that only changes the timing: the profit is still UK-taxable and still goes on a UK Self Assessment return.

Living abroad does not take UK rental income out of the UK tax net. Rent from UK land and buildings is always taxable here, whatever your residence status and wherever the money is paid.

Key points

• The scheme applies if your usual place of abode is outside the UK — broadly, if you are away for six months or more, which is not the same test as tax residence.
• A letting agent must deduct 20% from rent less allowable expenses they pay. A tenant paying you direct must deduct only if the rent is more than £100 a week.
• Form NRL1 lets you receive rent gross if your UK tax affairs are up to date. Approval is not a tax exemption.
• Most non-resident landlords still get the £12,570 Personal Allowance, so small rental profits often produce no tax at all — which is exactly when withholding hurts.
• Non-residents are not Scottish taxpayers, so UK rates apply even to a property in Scotland.

How the Non-Resident Landlord Scheme works

The NRLS is a withholding system, not a separate tax. HMRC's concern is simple: once rent leaves the UK it is hard to collect tax on it, so the scheme collects tax at source from whoever hands over the money.

Who counts as a non-resident landlord

For the scheme, you are a non-resident landlord if your usual place of abode is outside the UK. HMRC normally treats absence from the UK of six months or more as meeting that test. This is deliberately broader than the Statutory Residence Test, so you can be UK tax resident for the year and still fall inside the scheme — a common situation for people posted overseas mid-year, and for Crown servants and forces personnel stationed abroad.

It applies to individuals, companies and trustees whose usual place of abode or place of business is outside the UK. It covers rent from houses, flats, rooms, commercial premises and land.

Who has to deduct the tax

• A UK letting agent must operate the scheme on your rent, whatever the amount. "Agent" is wide: anyone who manages the property, finds tenants or collects rent for you, including a friend or relative doing it unpaid, can be caught if they act in the course of managing the let.
• The tenant must operate it if there is no agent and the rent is more than £100 a week. Below that, the tenant pays you in full unless HMRC writes to them and directs otherwise.

If both an agent and a tenant are involved, the obligation sits with the agent. The agent or tenant registers with HMRC's Charities, Savings and International team and is personally liable for tax they should have deducted — which is why agents apply the rules firmly.

What gets deducted, and when

Tax is charged at the basic rate of 20% on the rent received in the quarter, minus allowable expenses the agent has paid out on your behalf, such as repairs, ground rent, insurance and their own commission. Quarters end on 30 June, 30 September, 31 December and 31 March, with payment to HMRC due 30 days after each quarter end.

By 5 July after the tax year, the agent or tenant must send HMRC an annual return and give you a certificate (form NRL6) showing the tax deducted. Keep every certificate — that tax is credited against your final bill, and can produce a repayment.

One catch that surprises many expats: mortgage interest does not reduce the amount withheld. Since finance costs stopped being a deductible expense for individual landlords and became a 20% tax reducer instead, a heavily mortgaged property can have tax withheld on rent that produces very little real profit. Our rental income tax calculator shows the difference between the cash withheld and the tax actually due.

Receiving rent gross: the NRL1 application

You can ask HMRC for approval to receive your rent with no tax taken off. Individuals use form NRL1, companies NRL2 and trustees NRL3. The application is free and you make it yourself, not through your agent.

When HMRC approves

HMRC will normally approve you if one of the following is true:

• your UK tax affairs are up to date;
• you have never had UK tax obligations before; or
• you do not expect to be liable to UK Income Tax for the year in question.

Outstanding returns or unpaid tax are the usual reasons for refusal. Once approved, HMRC writes to your agent or tenant telling them to pay you gross from the start of the next quarter. Approval continues until HMRC withdraws it, but it can be withdrawn if you fall behind with returns or payments.

Joint owners and couples

Approval is personal. If a property is owned jointly, each owner must submit their own NRL1 — if only one of you is approved, the agent keeps withholding on the other's share. Spouses and civil partners owning jointly are normally taxed 50:50 on the rent unless the beneficial ownership is unequal and a declaration has been made to HMRC.

What approval does not do

Being paid gross is a cash-flow change, nothing more. You still owe UK tax on the profit, you still have to report it, and you will now have to fund the bill yourself rather than having it collected in instalments through the agent. If your profits are large, payments on account may also come into play.

Your UK tax return

Non-resident landlords file Self Assessment in the same way as anyone else, with two extra wrinkles: the residence pages, and how you can submit them.

Working out the profit

Profit is rent received less allowable revenue expenses: letting agent fees, repairs and maintenance (not improvements), insurance, service charges, ground rent, council tax or utilities you pay, and accountancy for the letting. Mortgage interest is handled separately as a 20% tax reducer. If gross rents are £1,000 or less, the property allowance can cover them entirely.

Rates on the profit, assuming you qualify for the Personal Allowance, follow the UK (non-Scottish) bands:

Scottish income tax rates apply only to people who are Scottish taxpayers, which requires a UK residence. A non-UK resident letting a flat in Edinburgh is therefore taxed at the rates above, not the Scottish bands. There is no National Insurance on rental profit.

Worked example: tax withheld versus tax due

Priya lives in Dubai and lets her former home in Manchester through an agent. In 2026/27 the rent is £18,000, the agent pays £3,600 of expenses (commission, insurance, repairs), and she pays £5,000 of mortgage interest direct to her lender. She has no other UK income.

• Withheld by the agent: £18,000 − £3,600 = £14,400 × 20% = £2,880 across the four quarters.
• Property profit: £18,000 − £3,600 = £14,400 (interest is not deducted here).
• Less the Personal Allowance: £14,400 − £12,570 = £1,830 taxable.
• Tax before relief: £1,830 × 20% = £366.
• Finance cost relief: 20% of the lowest of finance costs (£5,000), property profit (£14,400) and income above the Personal Allowance (£1,830) — so 20% × £1,830 = £366.
• Final tax due: £0. She reclaims the £2,880 withheld, and £3,170 of unused finance costs is carried forward to a later year.

That is the argument for applying on NRL1 early: without approval, Priya lends HMRC £2,880 for up to 21 months. You can test your own numbers with the rental income tax calculator.

Filing practicalities

You report rents on the UK property pages (SA105) and your residence position on the residence pages (SA109), where you also claim the Personal Allowance if you are entitled to it and claim credit for NRLS tax deducted. HMRC's own free online Self Assessment service does not support SA109, so non-residents normally file on paper by 31 October or use commercial software to file online by 31 January. The payment deadline is 31 January either way.

Two other deadlines matter to expat owners. Making Tax Digital for Income Tax starts from April 2026 for those with gross self-employment or property income above £50,000, bringing quarterly digital updates. And if you sell a UK residential property, a non-resident must report the disposal and pay any Capital Gains Tax within 60 days of completion, even if there is no gain and even if you are not otherwise in Self Assessment. Use HMRC's service to report and pay Capital Gains Tax on UK property.

Personal allowance for non-residents

The Personal Allowance is £12,570, and it is not automatic once you leave the UK. You can normally claim it if you are:

• a British citizen, or a national of an EEA country;
• a current or former Crown servant, or their widow, widower or surviving civil partner;
• resident in the Isle of Man or the Channel Islands;
• a resident of a country whose double taxation agreement with the UK grants the allowance — which many, though not all, do; or
• someone who has worked for the UK government at any time during the tax year.

Residents of countries such as the UAE, Australia and most of the Gulf may still qualify through citizenship rather than the treaty route. If you do not qualify from any angle, every pound of rental profit is taxable from the first pound, which usually makes gross payment approval more valuable, not less.

Remember the allowance is tapered away above £100,000 of adjusted net income, at £1 lost for every £2 over the threshold, and disappears entirely at £125,140. Overseas income is generally outside the UK charge for a non-resident, so the taper bites less often, but UK-source earnings and pensions count.

Finally, check the tax treaty with the country where you live. UK property income is almost always taxable in the UK first under treaties, but your home country may tax it too and give credit for the UK tax paid. Keep your NRL6 certificates and your UK calculation for that claim.

What to do next

Work out what your UK bill actually is before worrying about what is being withheld — the two are often very different. Put your rent, expenses and mortgage interest into the rental income tax calculator to see the profit, the tax and any repayment you may be owed. If the figures show little or no tax due, the Non-Resident Landlord Scheme guidance on GOV.UK explains how to submit form NRL1, and you can register for Self Assessment if you are not already in the system.