Non-Resident Landlord Scheme: Tax on UK Rental Income

The Non-Resident Landlord Scheme (NRLS) applies to anyone who rents out property in the UK while living abroad. If your usual place of abode is outside the UK, your letting agent or tenant is required to deduct tax from your rental income and pay it to HMRC on your behalf — unless you've received HMRC approval to receive rent without deductions.

This guide explains how the scheme works, who it applies to, how to apply for approval, and what you need to do for Self Assessment.

How the Non-Resident Landlord Scheme Works

The NRLS is a withholding tax system that ensures non-resident landlords pay UK tax on their rental income. Rather than relying on landlords abroad to file and pay voluntarily, HMRC places the obligation on the person paying the rent — your letting agent or tenant.

How the process works:

Your letting agent (or tenant) collects the rent
They deduct tax from the rental income after allowable expenses
They pay the tax to HMRC quarterly
You receive the net amount
You file a Self Assessment return at the end of the tax year to settle your final tax position

Quarterly payment dates: Tax is calculated and paid for quarters ending 30 June, 30 September, 31 December, and 31 March.

If you have NRL1 approval (see below), your agent or tenant pays you the full rent without deductions, and you handle the tax through Self Assessment instead.

Who Counts as a Non-Resident Landlord?

You're treated as a non-resident landlord if your usual place of abode is outside the UK. HMRC generally considers you non-resident if you're absent from the UK for 6 months or more.

The scheme applies to:

Individuals living abroad (including UK nationals working overseas)
Companies registered or managed abroad
Trustees with a usual place of abode outside the UK
Partnerships where any partner is non-resident

Example: Sarah is a UK citizen who moves to Dubai for a 2-year work contract. She keeps her buy-to-let flat in Manchester. From the date she leaves, her letting agent needs to operate the NRLS — deducting tax from her rent and paying it to HMRC quarterly.

What Income Is Covered

The NRLS covers income from:

Furnished and unfurnished residential lettings
Ground rents
Lease premiums
Service charges retained by the landlord

It does not cover commercial operations like hotels, guest houses, or mining income.

What Your Letting Agent or Tenant Does

If You Use a Letting Agent

Your letting agent is responsible for:

Deducting tax from your rental income each quarter
Subtracting allowable expenses before calculating the tax (where they're reasonably satisfied the expenses qualify)
Paying the tax to HMRC within 30 days of the quarter end
Providing you with a certificate showing income received and tax deducted

If You Rent Directly to a Tenant

If there's no letting agent, the responsibility falls on your tenant. However, tenants paying less than £100 per week don't need to operate the scheme unless HMRC specifically directs them to.

If the tenant does need to operate the scheme, they deduct tax from the rent they pay you and send it to HMRC quarterly.

How to Apply for NRL1 Approval

NRL1 approval lets you receive your full rental income without tax being deducted at source. You then report and pay any tax due through Self Assessment instead. For most non-resident landlords, this is the preferred arrangement because it avoids cash flow problems from quarterly deductions.

Who Can Get Approval

HMRC approves NRL1 applications when:

Your application is complete and correct
HMRC is satisfied you'll meet your UK tax obligations
Your UK tax affairs are up to date (or you've had no previous UK tax obligations)

How to Apply

Online: Apply through HMRC's digital service — sign in with your Government Gateway credentials.

By post: Complete form NRL1 (for individuals), NRL2 (for companies), or NRL3 (for trusts) and post it to HMRC.

What you'll need:

Your principal residential address abroad
Your UTR (Unique Taxpayer Reference), if you have one
Your National Insurance number, if applicable
Your letting agent's reference number (if you use one)

What Happens After You Apply

HMRC processes your application and sends approval notices to you, your letting agent, and your tenant. The notice includes:

An approval reference number
The date from which rent should be paid without deductions (typically the first day of the quarter in which you applied)

Timeline: Initial approval happens after basic checks. HMRC may carry out more detailed reviews later and can withdraw approval if you don't meet your tax obligations.

If HMRC Refuses

You can appeal in writing within 30 days of the refusal notice. HMRC may refuse if information on the form is incorrect or if they believe you won't meet UK tax obligations.

Self Assessment for Non-Resident Landlords

Whether or not you have NRL1 approval, you need to file a UK Self Assessment tax return to report your rental income.

With NRL1 approval:

You receive your full rent without deductions
You calculate your tax liability on your Self Assessment return
You pay any tax due by 31 January following the end of the tax year
Payments on account may apply if your tax bill exceeds £1,000 (2025/26)

Without NRL1 approval:

Tax is deducted from your rent quarterly by your agent or tenant
You still file Self Assessment to declare your full income and claim any relief
Tax already deducted is credited against your total liability
You may receive a refund if the quarterly deductions exceeded your actual tax bill

Allowable Expenses

Non-resident landlords can claim the same allowable expenses as UK-resident landlords, including:

Repairs and maintenance
Insurance premiums
Letting agent fees
Ground rent and service charges
Mortgage interest (as a Section 24 tax credit at the basic rate)

Your letting agent can deduct these expenses before calculating the quarterly tax withholding, provided they're reasonably satisfied the costs qualify.

Making Tax Digital for Non-Resident Landlords

Making Tax Digital for Income Tax applies to non-resident landlords in the same way as UK-resident landlords. If your qualifying income (gross rental income before expenses) exceeds the threshold, you'll need to use MTD-compatible software and submit quarterly updates.

Phase	Start date	Qualifying income threshold
Phase 1	6 April 2026	Over £50,000
Phase 2	6 April 2027	Over £30,000
Phase 3	6 April 2028 (pending)	Over £20,000

April 2027: Higher Tax Rates on Property Income

From April 2027, property income tax rates increase by 2 percentage points for all landlords, including non-residents:

Tax band	Current rate (2026/27)	New property rate (2027/28)
Basic rate	20%	22%
Higher rate	40%	42%
Additional rate	45%	47%

Non-resident landlords should factor these higher rates into their tax planning for the 2027/28 tax year onwards.

Frequently Asked Questions

Do I need to tell my letting agent I'm moving abroad?

Yes — your letting agent needs to know your non-resident status so they can operate the NRLS correctly. If they don't know you're abroad, they may not deduct tax, which could create problems for both of you with HMRC.

Can I avoid the withholding tax completely?

If you receive NRL1 approval, your agent or tenant pays you the full rent with no deductions. You then handle tax through Self Assessment. This doesn't avoid the tax itself — it changes when and how you pay it.

What happens when I return to the UK?

When your usual place of abode returns to the UK, the NRLS no longer applies. Inform your letting agent and HMRC. Your agent stops deducting tax from rent, and you continue reporting rental income through Self Assessment as a UK-resident landlord.

Do I still get the personal allowance as a non-resident?

It depends on your nationality and tax treaty arrangements. UK and EEA nationals generally retain the personal allowance (£12,570 for 2025/26). Non-EEA nationals may not be entitled to it unless a double taxation agreement provides otherwise. Check the relevant treaty or consult a qualified accountant.

This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.

Official Sources

What the Non-Resident Landlords Scheme is - GOV.UK
Apply to receive UK rental income without tax deducted (NRL1) - GOV.UK
Renting out a property - GOV.UK
Self Assessment tax returns - GOV.UK