The Non-Resident Landlords (NRL) Scheme is a scheme for taxing the UK rental income of non-resident landlords.
The scheme requires UK letting agents to deduct basic rate tax from any rent they collect for non-resident landlords. If non-resident landlords don't have UK letting agents acting for them, and the rent is more than £100 a week, their tenants must deduct the tax. When working out the amount to tax the letting agent/tenant can take off deductible expenses.
Letting agents and/or tenants don't have to deduct tax if HM Revenue & Customs (HMRC) tells them not to HMRC will tell an agent/tenant not to deduct tax if non-resident landlords have successfully applied for approval to receive rents with no tax deducted. But even though the rent may be paid with no tax deducted, it remains liable to UK tax. So non-resident landlords must include it in any tax return HMRC sends them.
Non-resident landlords who are eligible can apply at any time for approval to receive their UK rental income with no tax deducted. This includes applying before they have left the UK or before the letting has started.
Applications should be made:
Applications should be sent to the relevant tax districts dealing with non-resident landlords:
HMRC may refuse approval if it is not satisfied that:
HMRC may withdraw approval if:
HMRC will tell an agent/tenant not to deduct tax if the non-resident landlord has successfully applied for approval to receive rents with no tax deducted. But rent paid with no tax deducted remains liable to UK tax. So non-resident landlords must include it in any tax return HMRC sends them.
All non-resident landlords who receive rents with no tax deducted will have a tax district.
Some individuals who are not resident in the UK for tax purposes are not sent an annual tax return automatically, even though they have UK rental income. This is because many non-residents will have sufficient UK personal allowances to cover any liability.
A letting agent is a person who:
HMRC Residency has produced a booklet called Non-Resident Landlords - guidance notes for letting agents and tenants that tells people what their responsibilities are under the scheme. In addition, there is a brief Letting agent's guide to the NRL Scheme which outlines the main features of the scheme.
Tenants of non-resident landlords have to operate the scheme if:
either:
HMRC Residency may sometimes instruct tenants to operate the scheme even where the rent paid is less than £100 a week.
HMRC Residency has produced a booklet called Non Resident Landlords - guidance notes for letting agents and tenants that tells people what their responsibilities are under the scheme.
The NRL Scheme applies to members of HM Armed Forces and other Crown Servants - for example, diplomats - if they have a 'usual place of abode' outside the UK. They are treated no differently from any other non-resident landlords, even though their employment duties overseas are treated as performed in the UK for the purpose of charging their salaries to tax. So if their absence from the UK is for more than six months, they are within the scheme.
Members of HM Armed Forces and other Crown Servants are dealt with by Public Department 1 and Cardiff Group. The addresses are:
Public Department 1
Ty Glas Road
Llanishen
Cardiff
CF14 5XZ
Tel: 02920 325048
Fax: 02920 325954
Cardiff Group
Ty Glas Road
Llanishen
Cardiff
CF14 5YA
Tel: 02920 325363
Fax: 02920 326342
The NRL Scheme is administered by HMRC Residency. Tax is collected by the Accounts Office at Cumbernauld.
HMRC Residency has produced a booklet called Non-Resident Landlords - guidance notes for letting agents and tenants. This tells people what their responsibilities under the scheme are. In addition, there is a brief letting agent's guide to the NRL Scheme which outlines the main features of the scheme.
Non-resident landlords are persons (this term includes individuals, companies and trustees) who have:
Non-resident landlords can apply to receive their rent with no tax deducted on the basis that either
When approval has been given, HMRC sends:
Authority to pay rent to a non-resident landlord with no tax deducted is generally backdated to the beginning of the quarter in which HMRC receives the non-resident landlord's application. As the tax year for the NRL Scheme starts on 1 April, the quarters are the three-month periods that end on 30 June, 30 September, 31 December and 31 March. So if a non-resident landlord applies to HMRC on, say, 20 September, the authority HMRC send to his letting agent/tenant will usually take effect from 1 July.
Although HMRC refer to 'non-resident' landlords, it is usual place of abode and not non-residence that determines whether a landlord is within the scheme or not.
In the case of individuals, HMRC normally regard an absence from the UK of six months or more as meaning that a person has a usual place of abode outside the UK. It is therefore possible for a person to be resident in the UK yet, for the purposes of the scheme, to have a usual place of abode outside the UK.
You can obtain:
These forms are in PDF format. To view or to download blank forms for future use, you need Adobe Reader.
You can ask for these forms and leaflets by contacting HMRC Residency.
For help and advice about the NRL Scheme you can contact HMRC Residency by telephone or email.
Non-resident landlords, other than HM Forces personnel and other Crown Servants, who are applying for approval to have rents paid without deduction of tax should send their applications to HMRC Residency at the address stated within this section.
All non-resident landlords who receive rents with no tax deducted will have a tax district. These are:
For companies:
HMRC Residency
Non-Resident Company Landlords
St Johns House
Merton Road
Liverpool
L75 1BB
Telephone: 0845 070 0040 (from the UK) or +44
151 210 2222 (from abroad)
Fax: 0151 472 6149
or trusts:
HMRC Residency
Non-Resident Trusts
Unit 364
St John's House
Merton Road
Liverpool
L75 1BB
Tel: 0845 070 0040 (from the UK) or +44 151
210 2222 (from abroad)
Fax: 0151 472 6247
or other individuals
Non-resident landlords who are individuals that receive rental income without tax deducted are dealt with by different tax offices, depending on their status.
For HM Armed Forces personnel and other Crown Servants whose usual place of abode is outside the UK, the tax office is:
Tel: 02920 325048
Fax: 02920 325954
Tel: 02920 325363
Fax: 02920 326342
If you email , HMRC will endeavour to answer your query as quickly as possible. Please note that internet email is not secure. This means HMRC will reply by email only where it feels your confidentiality will not be breached. Otherwise, HMRC will email you to explain that it will be replying fully by letter or telephone.
For individuals whose usual place of abode is outside the UK, the tax office is:
HMRC Residency
Unit 367
St John's House
Merton Road
Liverpool
L75 1BB
For UK-resident individuals, the tax office is their General Claims District.
Quarterly returns and payments of tax due under the NRL Scheme, made using form NRLQ should be sent to Accounts Office Shipley. You can contact Accounts Office Shipley by writing to:
HM Revenue & Customs
Accounts Office Shipley
Non-resident Landlords Unit
Bradford
BD98 8AA
Tel:01274 539665
The Audit Unit (NRL) is responsible for conducting audit inspections to check that letting agents and tenants are meeting their obligations under the NRL Scheme. It is also responsible for form NRLY. You can contact Audit Unit (NRL) at:
HM Revenue & Customs
Audit Unit (NRL)
St John's House
Merton Road
Bootle
Merseyside
L69 9BB
Tel: 0151 472 6087/6284
Fax: 0151 472 6124
Form NRLY is normally sent to letting agents in May each year. You can also ask the Office Audit Unit (NRL) to send you one.
If letting agents wish to explore the possibility of submitting returns electronically they should contact the:
Tel: 0151 472 6218
Fax: 0151 472 6124
Where HMRC refuses, or withdraws, approval to receive rent with no tax deducted, the non-resident landlord can appeal to HMRC within 90 days.
Where HMRC and the non-resident landlord cannot reach agreement, the appeal will be referred to the General Commissioners or, if the non-resident landlord wishes, to the Special Commissioners. Both of these bodies are independent appeal tribunals.
Letting agents that have to operate the NRL Scheme must:
The Audit Unit (NRL) carry out audit inspections from time to time to check that letting agents have complied with their obligations under the NRL Scheme.
A key aspect of the inspection involves checking records held by the letting agent.
Tenants who have to operate the NRL Scheme have to:
Tax under the NRL Scheme is deducted by letting agents/tenants.
Letting agents/tenants must calculate the amount to tax each quarter.
They then need to apply the basic rate to arrive at the amount of tax due.
They pay the tax to the Accounts Office at Cumbernauld, using the quarterly payslip form NRLQ.
Letting agents or tenants must generally tax the rental income they pay to non-resident landlords unless HMRC has told them not to. In calculating the amount to tax, they take into account any 'deductible expenses' they pay in a quarter. These are expenses that they can reasonably be satisfied will be allowable expenses for the non-resident landlords when the profits of their rental businesses are computed.
Please see the Property Income Manual for advice on allowable expenses.
Letting agents who have to operate the NRL Scheme must send an information return on form NRLY to the Audit Unit (NRL) by 5 July following the year ended 31 March for which the return is made. Letting agents must show separately for each non-resident landlord (other than those gross-approved by Public Department 1 or Cardiff Group):
Letting agents and tenants must pay the tax due each quarter under the NRL Scheme using form NRLQ. Quarterly returns are due for the periods ending 30 June, 30 September, 31 December and 31 March.
Form NRLQ will normally be issued automatically by the:
CAR (Residency) NRLQ Team
St John's House
Merton Road
L75 1BB
Letting agents and tenants must enter on form NRLQ:
Letting agents and tenants should send the completed form NRLQ and payment for the amount due to Accounts Office Shipley in time to arrive there no later than 30 days after the end of the quarter to which it relates. For example, the form NRLQ for the quarter to 30 September 2000 must arrive at the Accounts Office by 30 October 2000.
Letting agents and tenants must keep adequate records to satisfy HMRC auditors that they have complied with their obligations under the scheme. In particular, for each non-resident landlord, letting agents and tenants should keep separately:
Letting agents and tenants should retain records for six years after the end of the year to 31 March to which they relate.
Records may be retained on microfilm, microfiche or any other medium which preserves an exact copy of the original document. Letting agents and tenants who wish to retain documents in this way should contact HMRC Residency before destroying the originals.
Under the NRL Scheme, tax is payable by letting agents and tenants without the need for HMRC to make tax assessments. But where HMRC have reason to believe that:
it can make an assessment.
When an assessment is made, the letting agent or tenant will be told how they can appeal. Appeals have to be made in writing to the Audit Unit (NRL) within thirty days of the date of the assessment.
Interest is due on amounts paid late. The Accounts Office in Cumbernauld may charge interest on assessed Income Tax from the date when the amount of tax became due until the date it is paid.
Letting agents who have to operate the NRL Scheme must register with HMRC Residency within 30 days of the date on which they are first required to operate the scheme.
Letting agents may register by completing form NRL4 (PDF 17K) and sending it to HMRC Residency. HMRC Residency will send the letting agent a registration number and the appropriate forms and information needed to operate the scheme.
The basic rate of tax for each tax year can be found in the Rates and Allowances section
All of these forms are in PDF format. To view a PDF document you must have Adobe Reader installed on your machine. If you require this material in large print or Braille please contact HMRC Residency. To save a file to your hard drive, right click on the link and choose the save option.
| Form | Title |
|---|---|
| Guidance notes (PDF 604K) | The Non-Resident Landlords Scheme - Guidance Notes for Letting
Agents and Tenants These notes give detailed guidance for letting agents and tenants on how to operate the Non-Resident Landlords Scheme. |
| NRLY (PDF 56K) | NRLY Annual Return This is an information return that letting agents, and certain tenants, have to make. |
| NRLY cont (PDF 12.3K) | NRLY Continuation Sheet This can be used where there is not enough space on the form NRLY itself. |
| NRLY notes (PDF 64K) | NRLY Notes for Completion This gives information on how to complete the form NRLY. |
| A Letting Agent's Guide to the Non-Resident Landlords Scheme (form NRL 200) (PDF 32K) | This tells letting agents whether they have to operate the NRL Scheme, and what the main responsibilities are. |
| A Tenant's Guide to the Non-Resident Landlords Scheme (PDF 27K) | This tells tenants whether they have to operate the Non-Resident Landlords Scheme, and what the main responsibilities are. |
When calculating the amount to tax, letting agents/tenants should:
Plus
Less
It is the date letting agents/tenants actually receive/pay the rents (or pay the deductible expenses) that determines when they calculate tax. The periods for which the rents (or expenses) are due are not relevant.
Broadly, in calculating the profits of a rental business, expenses are allowable where:
Information about what constitutes an expense of a 'capital' nature is provided in The Property Income Manual. For example, the cost of land and buildings and the cost of improvements and alterations is expenditure of a capital nature.
Expenses paid by letting agents and tenants which will normally be allowable expenses are:
Letting agents and tenants can deduct only those expenses which they pay or which are paid on their direction. This means they cannot deduct:
