Moving abroad doesn’t mean you stop paying UK tax on your rental property. If you own a UK rental while living overseas, you’re classed as a non-resident landlord — and there are specific rules about how your tax gets collected. Here’s what you need to know.
What Is a Non-Resident Landlord?
You’re a non-resident landlord if your usual home is outside the UK for six months or more per year, and you receive rental income from UK property. It doesn’t matter what nationality you are or whether you’re a UK citizen — it’s about where you live, not where you’re from.
HMRC assumes you might not come back to pay your taxes. So instead of waiting for you to file a return, they collect tax at source through the Non-Resident Landlord (NRL) Scheme.
How the NRL Scheme Works
Under the NRL scheme, whoever pays you the rent must deduct basic rate tax (20%) before passing the money to you. That means:
If you use a letting agent: The agent deducts 20% from your rent each quarter and sends it to HMRC on your behalf.
If you rent directly to a tenant: The tenant must deduct 20% and pay it to HMRC — but only if the rent is more than £100 per week. Below that threshold, tenants don’t have to deduct anything.
The tax is deducted from your rental income before expenses are considered. So if you receive £1,000 in rent, £200 goes to HMRC immediately — even if your actual profit after expenses would be much lower.
Getting Your Rent Paid Gross
Nobody wants 20% skimmed off every payment, especially if your expenses mean you’d owe less tax (or none at all). The solution is to apply for gross payment through HMRC’s NRL scheme.
Once approved, your letting agent or tenant pays you the full rent without deductions. You then handle your own tax through Self Assessment, declaring the income and paying any tax due by 31 January.
To apply, complete form NRL1i (for individuals) and send it to HMRC. You’ll need to show that your UK tax affairs are up to date or that you’ve never had UK tax obligations before. Approval usually takes a few weeks.
Do You Still Pay UK Tax?
Yes. Living abroad doesn’t exempt you from UK tax on UK rental income. The income arises in the UK, so the UK has taxing rights.
However, you might also owe tax in the country where you live. Many countries tax their residents on worldwide income, which could include your UK rent.
Double Tax Agreements
To prevent being taxed twice on the same income, the UK has double tax agreements with over 130 countries. These treaties determine which country has primary taxing rights and usually allow you to offset tax paid in one country against your liability in the other.
How this works in practice depends on where you live. Some countries exempt foreign rental income, others give you a credit for UK tax paid. Check the specific treaty or ask an accountant who specialises in expat tax.
You Still File a UK Tax Return
Whether you pay through the NRL scheme or receive gross payments, you’ll still need to submit a UK Self Assessment return each year. This is where you:
- Report your total rental income
- Claim your allowable expenses
- Calculate your actual tax liability
- Get a refund if too much was deducted, or pay any additional tax owed
The deadline is the same as for UK residents: 31 January following the end of the tax year.
What Happens When You Sell?
Non-resident landlords are also liable for UK Capital Gains Tax when selling UK property. Since April 2015, all gains on UK residential property are taxable regardless of where you live. You must report the sale within 60 days of completion.
Key Steps for Non-Resident Landlords
- Register with HMRC as a non-resident landlord
- Apply for gross payment (form NRL1i) to avoid automatic deductions
- File a UK Self Assessment return each year
- Check double tax treaties for your country of residence
- Report any property sale within 60 days
Living abroad adds complexity, but the basics remain the same: UK property income is taxed in the UK. Plan ahead and keep good records to avoid surprises.
Non-resident tax rules can be complex — consider specialist advice if you have properties in multiple countries.