Letting UK property while you live abroad

Who the scheme applies to

The Non-Resident Landlord Scheme applies to a landlord who lives abroad for more than six months of the year. That is the test, and it is worth reading twice, because it is not the same test as statutory residence for income tax. A person can be UK resident for tax purposes and still be a non-resident landlord for the purposes of this scheme if they spend enough of the year outside the country — a posting overseas, a long secondment, or splitting the year between two homes.

The scheme is a collection mechanism, not a separate tax. It does not change what you owe. It changes who hands part of it to HMRC, and when.

What your letting agent has to do

If you use a letting agent, the agent must operate the scheme regardless of the rent collected. There is no small-rent exception at agent level. The only thing that stops the deduction is HMRC approving in writing that the rent may be paid to you gross — and that approval does not remove the tax, it moves the whole liability onto your Self Assessment return.

The agent deducts at the basic rate of income tax, which is 20%, from the rent net of deductible expenses. That second point is the one landlords miss. The deduction is not 20% of gross rent; it is 20% of rent after the expenses the agent has paid or is aware of.

Worked example — illustrative. An agent collects £6,000 of rent in the quarter to 30 September and pays £1,200 of deductible expenses out of it — commission, a repair and the buildings insurance. The net figure is £4,800. Tax deducted is 20% of £4,800 = £960, which must reach HMRC within 30 days of the quarter end, so by 30 October. You receive £3,840.

What a tenant has to do when there is no agent

If you have no letting agent and the tenant pays you directly, the obligation moves to the tenant — but only above a threshold. A tenant must operate the scheme where they pay more than £100 a week. Below that, no deduction is required.

This is an awkward position for everybody. Your tenant becomes responsible for withholding tax from their own landlord, calculating it on rent net of deductible expenses, and paying it to HMRC on time. Most tenants have never heard of the scheme. If you are letting directly from overseas, the practical answer is either to apply to HMRC for approval to receive the rent gross, or to appoint an agent who knows the scheme exists, rather than to leave a private tenant carrying a statutory duty they do not know about.

The four dates, and the annual return

The scheme runs on tax quarters, not calendar months, and the payment deadline is 30 days from the end of each quarter.

On top of the quarterly payments there is an annual return: form NRLY, due by 5 July following the end of the tax year. The agent or tenant who has been deducting is the one who files it, and the same cycle produces the certificate of tax deducted that you need in order to account for the deductions on your own return.

All of these dates sit alongside the rest of the year's obligations on our landlord tax calendar.

Your UK tax return still happens

The scheme does not replace Self Assessment. UK rental profits are UK income and are reported on the property pages of a UK return in the ordinary way, with the tax deducted under the scheme accounted for there. The return is where the position is finally settled — the quarterly deductions run ahead of it and are calculated on a rough measure of profit rather than the real one.

Two things about the return matter more to non-resident landlords than to anyone else.

• The finance cost restriction applies to you too. Mortgage interest on a residential let is not deductible; you get a basic rate tax reducer instead. Because the scheme deducts on rent net of the expenses the agent handles, and interest is usually not one of them, the quarterly deduction and the final liability rarely match.
• Making Tax Digital may not reach you. One of the automatic and permanent exemptions from MTD for Income Tax is having no National Insurance number before the start of the tax year, which covers a great many landlords who have never worked in the UK. Non-resident companies filing an SA700 are also permanently outside it. And an individual's share of partnership profit is not qualifying income at all — partnerships do not currently need to use MTD for Income Tax. Our MTD guide sets out the qualifying income test in full.

The part that catches people: selling

The capital gains side of being non-resident is stricter than the income side, and it is where the penalties actually arise. A non-resident must report all disposals of UK property or land — even if you have no tax to pay on the disposal, and even if you have made a loss. The report is due within 60 days of completion, and interest and penalties apply for late reporting.

Read that again if you are a UK resident thinking about the same rule, because it is not the same. A UK resident reports within 60 days only where there is tax to pay. A non-resident reports every disposal, full stop. Non-resident capital gains tax was extended to all UK property and land from 6 April 2019, so it is not limited to residential property either — a commercial unit or a plot of land can be in scope too.

Worked example — illustrative. A non-resident sells a UK flat for £310,000. It cost £250,000 and the costs of sale are £6,000. The gain is £310,000 − £250,000 − £6,000 = £54,000. Deduct the annual exempt amount of £3,000 and the chargeable gain is £51,000. Taxed wholly at the higher residential rate of 24%, the tax is £12,240, reportable and payable within 60 days of completion. Gains falling within the basic rate band are taxed at 18% instead; above it the rate is 24%.

Now change one number. Suppose the flat sells for £240,000 and the disposal shows a loss. The tax is nil. The 60-day report is still required, and a missed one still attracts a penalty. That is the single most common and most avoidable mistake in this area. Our capital gains tax service page covers how the reporting is done, and the CGT calculator gives you an estimate before you commit to anything.

What to do this month

• Confirm who is deducting. If you have an agent, they must operate the scheme whatever the rent is. If you do not, and the rent is over £100 a week, your tenant is legally on the hook — which is not a comfortable place to leave them.
• Get the certificates. You need the record of tax deducted to account for it properly. The NRLY return is due by 5 July and the certificate follows the same cycle.
• Check the four payment dates are actually being met — 30 July, 30 October, 30 January and 30 April. Late payment is the agent's or tenant's problem legally and yours practically.
• Diarise 60 days from any completion. Not 60 days from exchange, and not only where there is tax. Every disposal, every time.
• Establish whether MTD reaches you at all. No National Insurance number before the start of the tax year is an automatic and permanent exemption, and a partnership profit share is not qualifying income.

One forward-looking point worth pricing in now: from 6 April 2027 property income has its own income tax rates in England, Wales and Northern Ireland — 22%, 42% and 47% — with the finance cost reducer given at the new property basic rate of 22%. That changes the liability your return settles, whatever the scheme has deducted along the way. It is one of several dated changes in landlord tax changes 2026 to 2028, and our non-resident landlord page explains how we handle the scheme, the return and the 60-day reporting as one job rather than three.