Anyone who owns a property in the UK that generates rental income must pay income tax on their profits.
It doesn’t matter where the landlord lives – the same rules apply if you live next door to a buy to let home or halfway around the world.
And special non-resident landlord scheme rules apply as much to landlords living overseas as to inbetweeners who spend six months or more outside the UK but who are still tax resident.
Landlords must register with HM Revenue & Customs for approval to join before they can operate within the rules.
If an overseas landlord is not in the NRLS, the letting agent or tenant must deduct income tax from rent before passing the balance to the landlord if the rent is more than £100 a week. Whoever deducts the tax is responsible for sending the money to HMRC.
At the end of the tax year, they must give you a certificate detailing how much tax they sent to HMRC.
Filling in the right forms
If you are approved as a NRLS landlord, you should report your property profits on a self-assessment tax return.
You should complete the core return (SA100), property pages (SA105) and if you do not live in the UK, the residence section (SA109).
Should you have a personal income tax allowance in the UK and the rent you earn is lower than the allowance, you can complete a Form R43 if the letting agent or tenant has already deducted tax that you are not due to pay.
NRLS landlords can deduct expenses from their rents, just like UK resident landlords.
Typical expenses include: mortgage interest, property insurance, letting agent costs, repairs, ground rent, advertising costs and accountancy costs.
Capital gains for non-residents
If you sell a property in the UK while living overseas, you may have to pay capital gains tax if you make a profit.
You must file a CGT return and pay any tax due within 30 days of completing the sale or disposal.
If a rental property is jointly owned, each owner must submit a self-assessment or CGT return with income and expenses split according to their share of ownership.