As a lettings agent, you know that landlords all have individual requirements that need dealing with in different ways. One type of property owner that requires very specialist handling is a non-resident landlord.
There are legal responsibilities as well as logistical difficulties when it comes to landlords that live overseas. If you are not sure about how to deal with non-resident landlords and what is required of you, read this article. You can also find out how to outsource the issue and lighten the burden on you or your administrative staff.
What is a Non-Resident Landlord?
A non-resident landlord is anyone who rents out property in the UK, but who lives overseas for more than six months (183 days). They may live out of the country for tax purposes, but as the rental income is earned in the UK, they will owe tax on the proceeds.
The Non-Resident Landlord Scheme
As a way of collecting the tax owed by overseas property owners, HMRC has created the Non-Resident Landlord Scheme. In cases where the landlord deals with the tenant directly, the tenant is responsible for deducting the tax owed in some circumstances. When lettings agents are involved, it is up to the agent to collect the tax, whatever the amount.
You must withhold the tax owed from the tenants’ rent, unless HMRC has specifically written to you to tell you otherwise. Even in this circumstance, you may still need to register with the scheme.
How the Non-Resident Landlord Scheme Works
Within 30 days of renting out a property for a non-resident landlord, you must register with the scheme. Use form NRL4i from HMRC for this purpose.
At the end of every tax quarter, you must calculate the amount of tax owed on the rental received. You then need to pay it within 30 days of the 30th June, 30th September, 31st December and 31st March.
To calculate the tax owed, you add up the rent you received over the three months, deduct the expenses and then multiply the remainder by the basic rate of income tax in the UK at that time.
In addition, you need to send an annual report using form NRLY to HMRC by the 5th July. You are also asked to send the landlord a report using form NRL6 by the same date.
What Records Do You Need To Keep?
You should keep records of your Non-Resident Landlord Scheme payments for four years, in case of an investigation by HMRC. These include dates and amounts of the rental payments you collected and expenses you incurred, along with a description of the expense and invoices or receipts. You should also file away correspondence with the landlord relating to their place of residence.
How to Deal with Non-Resident Landlords - Get Help
If all of this seems a little daunting, don’t worry; you’re not the only one that thinks that. It is a huge responsibility to get everything right, and HMRC is understandably keen to collect the correct amount of tax.
This is where Executive Property Management Solutions comes in. Amongst the many services we provide to take the weight of property management off your shoulders, we look after all matters relating to non-resident landlords. Let us deal with the detail; phone 0208 5757630 now, or fill in the contact form at the bottom of the page.