Property Owner UK rental income tax guide

Do you know what tax to pay on your rental income from UK properties? Here we explain what Tax you have to pay and your options for arranging payment.

UK Tax on Rental Income

Tax is payable on any UK property rental income to the UK Government (Her Majesty’s Revenue and Customs HMRC). The tax is payable whether or not you live in the UK. To calculate the amount of tax owed also depends on your residency status.

UK Residents

If you reside in the UK for more than 6 Months you are considered a UK Tax Resident. For UK Tax residents we pay the rent to you without any tax deducted. You are liable for calculating and paying your own rental income tax owed through your usual Self-Assessment Tax Return. You should use supplementary pages SA105 for this. We would be happy to introduce an Accountant if you need assistance.

Non-UK Residents

If you do not reside in the UK (i.e. if you live abroad for 6 months or more per year), you are classified as a ‘non-resident landlord’ by Her Majesty’s Revenue and Customs (HMRC), even if you are a British Citizen. In this case you have 2 options. Either we can pay any tax due for you “At Source”. Or you can make an application to calculate and pay your own tax.

regulations

We calculate and pay tax for you

If you decide not to calcualte and pay the rental income tax yourself, then legally, we are obliged to calculate and deduct 20% tax from your quarterly rental income, often referred to “at source”. This tax payment will be made automatically, if you have not given us a Non-Resident Landlord Tax Certificate (see below) within the first 3 months of the first rental payment we send you. The amount of tax we pay to HMRC will be net of any allowable deductions such as property repairs or management fees. The tax is calculated and paid quarterly to HMRC and we will issue you a NRL6 certificate at the end of the tax year explaining the amount of tax deducted, should HMRC raise any tax enquiries with you. We charge £240 (£200 + VAT) per annum for this service which is deducted from your rent quarterly (£60 per quater). More details about this obligation can be found here.

When you sign up for our Rent Collect, Managed Property or Full House service we will ask you if you wish to calculate and pay the tax yourself or if you would like us to do it for you. For our Find-A-Tenant Rent is paid directly to you by the Tenants and will need to make your own tax arrangements.

referencing

Calculate and pay tax Yourself

If you do not want us to automactically calculate and pay any rental income tax for you, then you can apply to HRMC to have your rent paid to you “Gross”, without any automatic tax deductions. To do this you need to make an application to join the Non-Residents Landlord Scheme (NRLS) by downloading the appropriate form from the HMRC website:

1. NRL1i – if you are an individual landlord (Please note if the property is jointly owned, each non-resident owner will need to complete a separate application form.)
2. NRL2i – if the rental property is owned by a company

As we are acting as your letting agent, when you complete this form, you will need to provide our details to HMRC below:

Letting Agent: RentLondonFlat.com
Address: Bentinck House, 3-8 Bolsover St, Fitzrovia, London, W1W 6AB
Agent Reference Code: 904/NA 050433

If you would like us to assist in preparation of this form to HRMC and submit an application for you the fee is £180.00 inc VAT. When you sign up for our Rent Collect, Managed Property or Full House service we will ask you if you want us to calculate and pay tax for you or if you wish to do it yourself.

hassle free

Once your application is approved

Once your application is approved, HMRC will issue us a notice to confirm that no tax needs to be deducted from your rent before remitting the rent to you.

It should be remembered that acceptance to NRLS is an approval to receive rental income gross. It is not an exemption from tax liability and you still need to arrange to have your income assessed and tax paid to HMRC separately.

If you have not yet appointed a tax accountant, we would be more than happy to refer you to our trusted accounting associates who are able to assist you with all your UK tax affairs.

In cases where you already held NRLS status with a previous agent other than RentLondonFlat.com, you will need to write to HMRC and request a change of letting agent on their records, and to provide given them with our agency reference code as above. This is because such NRLS notices are not transferable between agents or tenants, and we are obliged to deduct tax as described at the start of this guide until we receive contrary notice from HMRC.

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