The Non-Resident Landlord Scheme (NRLS) applies to landlords who rent out UK property while living abroad. The scheme helps HMRC collect tax on rental income before landlords receive rent. Depending on how rent is collected, tenants or letting agents may need to operate the scheme.
UK rental income remains taxable even when the landlord lives overseas, regardless of UK residence status. HMRC introduced the NRLS because recovering unpaid tax from people abroad can be difficult.
Where a UK letting agent manages the property, the agent usually deducts tax before paying rent to the landlord. If no letting agent is involved, tenants must normally deduct tax when rent paid directly to the overseas landlord exceeds £100 per week.
Landlords can offset tax deducted under the scheme against their UK tax bill through Self-Assessment. The scheme does not create the tax liability itself because UK rental income remains taxable whether tax is deducted or not.
Who Qualifies as a Non-Resident Landlord
A landlord can fall within the NRLS even if they qualify as UK resident under the Statutory Residence Test. HMRC generally treats landlords as non-resident when their usual place of abode is outside the UK for six months or more.
The rules apply to individuals, trustees, companies and partnerships. In partnerships, each partner is treated separately for their share of the rental income.
Landlord Responsibilities
Non-resident landlords usually need to complete a UK Self-Assessment tax return if they receive UK rental income. Any tax deducted under the scheme can be claimed against the final liability.
Some landlords may also need to comply with Making Tax Digital from April 2026, depending on rental income levels. Living overseas does not create an automatic exemption.
Landlords can apply to receive rental income without tax deducted at source. HMRC normally approves applications where tax affairs are up to date, no previous UK tax obligations existed, or no UK tax is expected for the year. Applications can be made online or using form NRL1. Joint owners must apply separately.
Receiving rent gross does not make the income tax-free. The landlord remains responsible for paying tax directly to HMRC. Overseas landlords should also check whether the income is taxable in their country of residence and whether double tax relief applies.
Tenant Obligations Under the Scheme
Tenants may need to operate the NRLS when they pay rent directly to a landlord living abroad and the rent exceeds £100 per week. These obligations usually do not apply when rent is paid through a UK letting agent.
Where the scheme applies, tenants must register with HMRC and deduct tax at the basic rate, currently 20%. Quarterly payments are made using form NRLQ, while annual reports are submitted using form NRLY. Tenants must also provide the landlord with a certificate confirming the tax deducted.
Records should be kept for at least four years, including rent payments, expenses and correspondence about the landlord’s residence status.
Calculating Tax Under the NRLS
Tax is deducted at the basic rate from rental payments after allowable expenses are considered. Expenses generally qualify when they relate wholly and exclusively to the rental business and are not capital in nature.
No deduction can be claimed for expenses paid directly by the landlord. Tax may still need to be withheld even when the landlord’s UK income falls within the personal allowance.
Special rules apply where more than one landlord or tenant is involved. HMRC applies the £100 weekly threshold separately to each landlord and tenant based on their share of the rent.
Managing Property for Family or Friends Overseas
Someone managing a UK property for an overseas friend or family member may qualify as a letting agent under the scheme. This usually happens when the person lives in the UK, manages the rental business and controls the rental income.
In these cases, the full range of NRLS obligations may apply, including registering with HMRC, withholding tax, submitting returns and issuing certificates to the landlord.