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Non UK resident Landlord?

Are you a Non-resident Landlord? Do you know what forms you need to complete to be compliant with...

Are you a Non-resident Landlord? Do you know what forms you need to complete to be compliant with HMRC? We have put together some helpful advice for you.

NON-RESIDENT LANDLORDS

  • Who are non-resident landlords
  • Usual place of abode
  • Jointly owned property    
  • Husband and wife joint-ownership cases
  • HM Armed Forces and other Crown Servants 
  • How do letting agents and tenants know whether a landlord has a ‘usual place of abode’ outside the UK

Who are non-resident landlords?

  • Non-resident landlords are persons who have UK rental income
  • whose ‘usual place of abode’ is outside the UK.   
  • Landlords, for the purposes of the Non-resident Landlords (NRL) Scheme, include individuals, companies and trustees. In the case of partnerships, each partner is treated as a separate landlord in respect of their share of the rental income.

Usual place of abode

  • It is usual place of abode and not non-residence that determines whether a landlord is within the scheme or not. In the case of individuals, HMRC normally regard an absence from the UK of six months or more as meaning that a person has a usual place of abode outside the UK. It is therefore possible for a person to be resident in the UK yet, for the purposes of the scheme, to have a usual place of abode outside the UK.
  • Companies that have their main office or other place of business outside the UK, and companies incorporated outside the UK, normally have a usual place of abode outside the UK.  However, companies regarded as resident in the UK for tax purposes do not have a usual place of abode outside the UK for the purposes of the NRL Scheme, even though they may be incorporated outside the UK. 
  • The UK branch of a non-resident company, where that branch is within the charge to Corporation Tax, does not have a usual place of abode outside the UK for the purposes of the NRL Scheme. 
  • Trustees have a usual place of abode outside the UK if all the trustees have a usual place of abode outside the UK (following the rules for individuals and companies, as appropriate).  If one or more of the trustees does not have a usual place of abode outside the UK, the trustees are not a non-resident landlord for the purposes of the NRL Scheme.

Jointly owned property

  • Where a property is jointly owned and one or more of the joint owners has a usual place of abode outside the UK, the share of rental income attributable to those joint owners falls within the NRL Scheme.  The share attributable to joint owners who do not have a usual place of abode outside the UK does not fall within the Scheme.  For husband and wife joint-ownership cases, see below.

Husband and wife joint-ownership cases

  • Where a husband and wife jointly own a UK property and both have their usual place of abode outside the UK, the NRL Scheme applies to both spouses and each is treated as a separate landlord in their own right.  If the husband and wife both wish to receive the rental income with no tax deducted they must each complete a separate application form and send it to HMRC
     
    In such cases, letting agents and tenants should pay rental income with no tax deducted only to the spouse(s) named on the HMRC authorities they hold.  Under no circumstances should they pay with no tax deducted to a husband and wife where they hold an authority to do so for only one spouse.
     
    But if only one of the spouses has a usual place of abode outside the UK, the NRL Scheme applies only to that spouse’s share of the rental income.  The rental income belonging to the UK-resident spouse is not within the Scheme and no HMRC approval is required to pay the income with no tax deducted.

Members of HM Armed Forces and other Crown Servants

  • Members of HM Armed Forces and other Crown Servants, including diplomats, are treated no differently from any other non-resident landlords.  So if they receive UK rental income and have a usual place of abode outside the UK (see paragraph above) the NRL Scheme applies to them.  
  • If members of HM Armed Forces and other Crown Servants whose usual place of abode is outside the UK wish to receive rental income with no tax deducted, they should apply to HMRC for approval (see Chapter below).

How do letting agents and tenants know whether a landlord has a ‘usual place of abode’ outside the UK?

  • A landlord’s usual place of abode (see paragraphs 2.3 to 2.6 above) will usually be evident without the need for special enquiries.  If it is outside the UK, letting agents or tenants should operate the NRL Scheme.  If the usual place of abode is in doubt, letting agents and tenants should get more information from the landlord to satisfy themselves on the point.  In particular, PO Box numbers and ‘care of’ addresses alone should not be relied on as evidence that the Scheme does not apply.  In cases of difficulty letting agents can get advice from PTI (see paragraph above)
  • Where letting agents and tenants have no reason to believe that a landlord has a usual place of abode outside the UK they are not required to make any special enquiries.  In these circumstances they do not have to operate the Scheme.

For more information on tax for overseas Landlord please contact your local Belvoir Office who will be more than happy to assist.

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