UK Property & Tax

For anyone, owning property in the UK but whose usual home is outside the UK, their tenants or letting agents will need to operate the Non-resident Landlord (NRL) Scheme. Consequently, either the tenant or the letting agent is obligated to deduct basic rate tax from rental income before they pass it onto the property owner. The owner, can then offset this tax off against their own tax bill at the end of the year.  Alternatively, the property owner can apply through the non-resident landlords scheme to have your rent their rent paid gross, by seeking approval from the HMRC as a Non Resident Landlord.

To contact our Income Tax Accountant to discuss the Non Resident Landlord scheme further and how it applies to your circumstances please enquire here.

Click here to download a Fee Schedule for our Tax services.

Click here to become a Non Resident Landlord .

Non Residents FAQ:

Do I Need to Pay Tax On Rental Income From An Investment Property, Or My Previous Home In The UK?

UK tax is due on your income from any rental property if:

  • You are non-resident and you get rent from UK property paid directly to you, and you are not registered as a non-resident landlord, your tenant must deduct UK tax at the basic rate – currently 20 per cent.
  • If you use a letting agent, they have to deduct the tax from the net rent following expenses and are subject to submissions to the HMRC to validate they are doing so.
  • You can apply to have the rent paid to you without tax deducted (Non-resident landlord approval) if you don’t think you’ll have to pay any UK tax, or if your tax affairs are up to date. But you’ll still need to declare the rent on a Self-Assessment tax return if HMRC sends you one.
  • If the country you live in has a double taxation agreement with the UK you may be able to get relief in your country of residence for UK tax paid.

How Do I Register as A Non-Resident Landlord?

You can get your rent either:

  • in full and pay tax through your annual self-assessment - if HMRC approves you to do this
  • with tax already deducted by your letting agent or your tenant at source.

If you want to pay tax on your rental income through annual self-assessment and not by deduction at source then you are required to complete a Self-Assessment form annually and also complete form NRL1i and return it to the HMRC. If they then give approval to us, as your letting agent, to pay rent gross of Tax, for all future years you will need to declare your rental income in your Self-Assessment tax return.

HMRC will not approve your application if your taxes aren’t up to date, for example if you are late with your tax returns or payments.

To assist you can either:

  • Complete your details via this link to become a Non Resident Landlord
    • ( a form is required for each applicant if the property is held in joint names and they must be individually submitted to us).
      Upon receipt, we will populate an HMRC application along with all of your property details including legal dates of ownership and rent due.
    • We will then return a PDF of the document to you for signature which will need to be posted or couriered back to us in original form.
    • We will handle the application to HMRC through to approval and will retain a copy of the approval on file, as well as sending a copy to you.
    • We do charge a fee for this service of £50.00 which can be debited from your rent account with us if you choose.

 

  • OR follow this link to the HMRC website and complete the application yourself.
  • You can submit this online by opening a government gateway account, or alternatively you can use the postal form. ( please retain a copy with this option).
  • You can ask us for any details of your property at any time.
  • There is no fee for this method, but you must retain all records and follow through your application, as we cannot pay your rent without deducting tax until we receive the approval number from the HMRC.

Click here to learn more.

As A Property Investor How Does SDLT Affect Me?

From April 1 2016, anyone purchasing an additional/second property will have to pay an extra 3 per cent stamp duty. The changes apply to companies and individuals no matter how many properties you are purchasing.
As an example from April, second homes owners or landlords will have to pay 3 per cent for the first £125,000 (prior to April 1st the rate for up to £125,000 was 0 per cent and 5 per cent on the amount between £125,001 and £250,000 where it was previously 2%.
Currently freehold property purchases involving transactions less than £40,000 don’t need to pay SDLT or tell HMRC about freehold land and property transactions with a total chargeable consideration of less than £40,000. But the total chargeable consideration includes any linked transactions so caution is advised.

As A Non-Resident Landlord How Does Capital Gains Tax Affect Me?

It used to be the case that if you had one property in the UK, but were a non-UK resident and you sold that property, you would not be liable for any Capital Gains Tax on the sale. However, as of April 6th 2015 a new rule was introduced which saw this loophole closed.

Key elements to consider with regards to the rule change include:

  •  What is the value of your property as of April 6th 2015?
  • Will the capital gains still fall within your tax allowance?
  • What are the capital gains from the sale of the property (i.e. how much was it bought for and how much is it worth)?
  •  Is it worth taking advantage of rising UK house prices before the new rule comes into play?
  • If you are considering buying a UK property, you should factor in Capital Gains Tax if your purchase is as an investment

At What Point Do I Become A Non - Resident For UK Tax?

You’ll be treated as non-resident from the day following your departure from the UK if you can show:

  • You left the UK to go abroad permanently or your absence and full-time work abroad lasts at least a full and whole tax year
  • Your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years

The same rule applies to your spouse, civil partner or partner.

Do I Need To Contact HMRC If I Intend To Leave The UK?

If you have left or are about to leave the UK you must tell HM Revenue & Customs (HMRC). If you’re not required to fill in a tax return, you’ll have to complete form P85 Leaving the UK . HMRC will use the information on the form to send you any tax refund you’re owed and work out if you’ll become non-resident. It’s important you enclose parts 2 and 3 of form P45 if you have one as HMRC will not be able to make any tax refund due without them. You’ll need to send the original versions – photocopies won’t be accepted. If you’re leaving the UK to work full-time abroad for a UK based employer for at least a complete tax year, you’ll need to fill in a tax return as well as a form P85.

Further Information:

HMRC - Capital Gains Tax - FAQ's

Click Here to download the frequently asked question's PDF regarding Capital Gains Tax produced by the HMRC.

HMRC - Stamp Duty Land Tax - FAQ's

Click Here to download the shortened version of the frequently asked question's PDF regarding Stamp Duty Tax produced by the HMRC.