FAQ's - United Kingdom

The Non resident Landlords Scheme is a scheme for taxing the UK rental income of Non resident landlords.

Unless a landlord is registered with the Inland Revenue in the UK, the property agent will deduct basic rate income tax on your behalf. If you do not have a property agent in place, the Revenue will collect the basic tax rate directly from the tenant. Any UK income tax that has been overpaid, can be rebated by filing a UK tax return. This procedure can be avoided, by registering as a non resident landlord in the UK with the Inland Revenue under the Non Residents Landlord Scheme (NRL Scheme). Once you are registered, you can then receive your rental income gross, and can file an annual self assessment tax form for your UK tax returns.

If you let your property in the UK, you are obligate to file an income tax return to the HMRC on an annual basis. If you are registered under the NRL Scheme, this can be done on a self assessment basis, and allowable expenses can be deducted.

Income generated from a UK investment property is taxed at the marginal rate of tax in the U.K. between 10% and 40% depending on the levels of rent received. Therefore, if you have submitted an NRL1 Form for your UK tax return, you will receive your rental income gross, and will file a UK tax return and deduct your allowable expenses.

Most non residents will ordinarily be exempt from any Capital Gains Tax in the UK, providing they are a resident of a country that there is a double taxation agreement in place. You will however, be subject to Capital Gains Tax in your home country, and pay the current local CGT rate in place there.

The tax year I nthe UK runs from the 5^th of April to the 6^th April each year, and as such UK tax returns must be filed with the HMRC by 31^st January each year.

The implications of filing a late UK tax return are a standard fine of £100 per person per tax return due,  is applied to each late submission of a return where a tax liability is due. Where the UK tax returns that are not submitted within six months of the filing deadline date, there will be a further £100 levied on each UK tax return. Should your UK tax returns remain outstanding for a number of years, the Inland Revenue can levy a fine of £60 per day from the date the return is late. Penalties of up to 100% can be added to any tax that is due.

The allowable expenses for a non resident on their UK tax return would be any management fees incuured, any maintenance fees, utility bills, insurance premiums for the property, furnishings, fittings, legal fees for contracts under a year,  local tax paid in the year, any expense relating wholly to the rental of the property can mostly be claimed.

Yes, you can claim mortgage interest relief on your UK tax returns, the UK has a double taxation agreement with most countries, and as such allows you to claim the mortgage interest relief on your mortgage for your investment property in the UK.

All dwellings in the UK are subject to a local council tax, which is a property tax and is calculated on a daily basis. This tax applies to vacant properties also. Each individual owner is subject to council tax, married couples are assessed separately. You can claim the council tax rates you pay as an allowable expense on your UK tax returns.

Every individual filing a UK tax return will need a taxation identification number (TIN) in order to file their UK tax return. It is a unique code that allows the HMRC to identify you.

Non residents are not liable to CAT in the UK, but may very well be subject to CAT in their home country, at the local rates of CAT applicable.