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Overseas Landlords, Tax on Rent and Fines on Letting Agents and Tenants!

Tenants

Does your landlord live overseas for more than 6 months a year and do you pay over £100 a week in rent? If so, you may need to register with HMRC to have tax deducted from your rent, otherwise risk being liable to a fine! This applies whether you pay your landlord directly or their UK representative such as a friend or family member.

Tenant Tip: Always check who your landlord is to avoid being caught out.

Exceptions:

  1. If your Non-Resident Landlord (NRL) has a letting agent. Their letting agent will be responsible for operating the NRL scheme; or
  2. If HMRC has told you in writing that your landlord can receive the rent with no tax deducted. In this situation, you do not need to deduct the tax but may still need to register with HMRC and complete an annual report.

Letting Agents

Do you help an overseas landlord run their UK rental business, receive their rent/control where it goes and live in the UK for more than 6 months a year? If you answered yes to these questions, you are considered a letting agent under the NRL scheme and must operate the NRL scheme regardless of how much rent you collect.

Letting Agent Tip: You can be caught as a ‘letting agent’ as an estate agent, solicitor, accountant or even friend of the landlord.

Exceptions:

  1. If you only give an overseas landlord legal advice and/or services, you are not a letting agent; or
  2. If HMRC has told you in writing that the overseas landlord can receive the rent with no tax deducted. In this situation, you do not need to deduct the tax but may still need to register with HMRC and complete an annual report.

The NRL Scheme

Although the NRL scheme has been in operation for some years, HMRC are now clamping down. They are writing to thousands of tenanted properties that they suspect to be let by overseas landlords, asking tenants to pass them any personal and financial information that they may hold on their landlords and warning tenants that they may have to deduct tax from their rent payments or risk a fine from HMRC for non-compliance!

For more information please see:

https://www.gov.uk/guidance/paying-tax-on-rent-to-landlords-abroad

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