Taking airline to another part of the world? if your rent out your property you're a non-resident landlord.
Many overseas investors and people working abroad own rental properties in the UK. 
 
If you live outside the UK and are a landlord here you’re a non-resident landlord (NRL) and must pay income tax on your rental profits. 

Am I a non-resident landlord? 

You are an NRL if you spend less than 183 days in the UK each year and have your main residence outside the UK. So, if you live overseas for over half the year and rent out properties in the UK, you’re an NRL. This is automatic, regardless of your nationality or where you were born. Companies, partnerships and trustees can also be NRLs. 
 

Reporting your NRL income 

As an NRL you must report your UK rental income to HMRC and pay taxes. You must complete and submit NRL forms giving your: 
name 
address 
contact information 
UK rental property details 
estimated rental income. 
 
You’ll also have to confirm how long you live outside the UK each year. 
 
HMRC will check the information you provide and give you a unique taxpayer reference (UTR) number. 
 

How much tax will I pay? 

You’re allowed to deduct property maintenance expenses and rental-related costs from your rental income. What’s left is your rental profit and this is taxable, along with other UK income such as pensions, savings and wages. The first £1,000 of your rental income is your property allowance and is tax free. After that, you’ll pay tax at the UK basic, higher and additional rates (20%, 40% and 45%). 
 
If you’re renting out your property through a limited company, corporation tax applies on a sliding scale of 19% to 25%, depending on profits. 
 
Tenants paying over £100 per week might have to register with HMRC and pay tax on your behalf every quarter. If you use a UK letting agent they must report your profits in June, September, December and March. They must also deduct tax for HMRC unless you’re already approved to receive the income with no tax deducted
 
You can only register for self-assessment and to have no tax deducted if: 
your UK tax affairs are up to date 
you have never had any UK tax obligations 
you don’t expect to be liable to UK tax in the year of application. 
 
You can’t file your tax returns through HMRC’s free online self-assessment service. You can only send a paper form by post or use HMRC compatible software
 

Tax penalties 

You are liable for tax as soon as you rent out your property. Once you have a UTR from HMRC, you must report your profits and pay your taxes regularly. 
 
If you don’t provide information to HMRC you could be fined up to £300. There are additional penalties of up to £60 per day for as long as the situation is unresolved. If you submit incorrect quarterly or annual returns you could be fined up to £3,000. If you underpay the tax due HMRC might also charge interest on the amount you owe. 
 
To avoid unexpected tax bills and penalties from HMRC it’s important to keep good records of your rental income and property expenses. Information you must keep includes rent you receive, the date you pay expenses along with the amount and a description. You should also keep copies of receipts and invoices. Then you’ll be ready to submit your self-assessment tax return on time and claim a refund for any overpayments to HMRC. 
 
Please get in touch if you would like to discuss your bookkeeping requirements as a non-resident landlord. 
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