The Ultimate Guide to the Non-Resident Landlord Scheme (NRLS)

What is the Non-Resident Landlord Scheme?

When UK property is owned by individuals living abroad, it can be difficult for HMRC to collect the correct tax. That’s why the Non-Resident Landlord Scheme (NRLS) exists. It ensures tax on rental income is collected at the source—by requiring tenants or letting agents to deduct basic rate tax (20%) and send it to HMRC.

If you’re unsure whether this scheme applies to you, this guide outlines the essentials, including eligibility, obligations, and how to stay compliant.

Are You a Non-Resident Landlord?

You are classed as a non-resident landlord if:

You receive rental income from UK property, and
Your usual place of abode is outside the UK

Example: If you spend 7 months a year living in Spain and 5 months in the UK, HMRC will generally view your usual abode as Spain.

Note: HMRC may require your tenant or letting agent to apply NRLS rules even if you meet only one condition.

Can You Receive Rent Without Tax Being Deducted?

Yes, you can apply to HMRC to receive your rental income in full (gross), without the 20% tax being withheld—provided you meet certain criteria:

Your UK tax affairs are up to date
You have no expected UK tax liabilities in the current tax year

You’ll need to submit the correct application form based on your landlord status:

NRL1 – Individual landlords
NRL2 – Company landlords
NRL3 – Trusts

Authorised agents can also apply on your behalf using HMRC’s agent authorisation process.

Responsibilities of Tenants and Letting Agents

If a tenant or agent is required to operate the NRLS, they must:

Register with HMRC using form NRL4, within 30 days of becoming liable
Submit quarterly returns (form NRLQ) and pay the tax deducted within 30 days of each quarter end
Submit an annual return (form NRLY) by 5th July each year
Issue a yearly certificate (form NRL6) confirming tax deductions to the landlord

When is a Tenant Exempt?

Tenants are exempt from operating under the NRLS if:

The weekly rent is less than £100
They do not pay rent directly to the landlord (e.g., it’s paid to a letting agent)

Note: Letting agents must always operate the scheme regardless of rent amount.

How Much Tax is Deducted?

The tax deducted under the NRLS is at the UK basic rate of 20%.

Example: Gross Rent: £1,200/month → Tax Deducted: £240 → Rent Received: £960

Do Non-Resident Landlords Have to File a UK Tax Return?

Yes. Even if tax is already deducted, landlords must submit a Self Assessment return each year. This ensures:

Overpaid tax is refunded
Any underpayment is correctly settled

Summary of Your Tax Obligations

Type of Landlord	2024/25 UK Rental Income	Action Required
Individual (non-resident)	Under £50,000	Submit Self Assessment
Individual (non-resident)	Over £50,000	Submit Self Assessment + follow MTD from April 2026
Non-UK Company	Any amount	Submit Company Tax Return + pay Corporation Tax

Making Tax Digital (MTD)

From April 2026, non-resident landlords earning over £50,000 annually must comply with Making Tax Digital (MTD) for Income Tax. This includes keeping digital records and submitting quarterly updates via approved software.

Can a Company Be a Non-Resident Landlord?

Yes. A company qualifies as a non-resident landlord if it is either:

Incorporated outside the UK
Controlled or managed from abroad

Such companies must file a Company Tax Return and pay Corporation Tax on UK rental profits.

Do You Qualify for the Personal Allowance?

You may still be entitled to the UK Personal Allowance (£12,570) if:

You hold a British passport
You’re a citizen of an EEA country
You worked for the UK government during the tax year
Your country has a double taxation agreement with the UK

Example: Rental income = £15,000 → Personal Allowance = £12,570 → Taxable = £2,430

Will the Tax Deducted Reflect Your Personal Allowance?

No. Tenants and letting agents are required to deduct 20% regardless of your eligibility. You can either:

Apply to HMRC to receive gross rent
Submit a Self Assessment to reclaim overpaid tax

Need Help with NRLS?

Understanding and complying with the NRLS can be complex—but that’s where Wingate Accountants can help. Whether you’re an individual landlord or running a company, we offer comprehensive support including: