Non-Resident Landlord Scheme (NRLS): Form NRL1, NRL6 & rental tax
Complete guide to the Non-Resident Landlord Scheme: how to submit Form NRL1, stop letting agent 20% tax deductions, and claim your full Personal Allowance.
Short answer: If you live abroad and rent out property in the UK, HMRC treats you as a Non-Resident Landlord. Letting agents and tenants must legally deduct 20% basic rate tax from your gross rent unless you apply for HMRC approval using Form NRL1. Once approved, you receive rent in full without deductions, and you calculate your true tax on annual profits via Self Assessment. Matthew prepares and submits your NRL1 application, files your SA105 property pages and SA109 non-resident return, and claims your full UK Personal Allowance.
Key points
- Letting agents must deduct 20% basic rate tax from gross rent unless HMRC has granted gross payment approval.
- Submitting Form NRL1 (for individuals) gives you permission to receive rent gross without any tax deductions.
- Approval to receive rent gross is not a tax exemption; you calculate tax on net profits on your annual UK tax return.
- British and EEA citizens living abroad can claim the full £12,570 UK Personal Allowance on Box 16 of form SA109.
- Letting agents must issue Form NRL6 annually by 5 July detailing any tax withheld during the tax year.
- Matthew prepares and submits your NRL1 application, claims allowable expenses, and handles all HMRC correspondence.
How the Non-Resident Landlord Scheme (NRLS) operates
The Non-Resident Landlords Scheme is governed by Part 11 of the Taxes Management Act 1970 and statutory regulations. It applies whenever a person who has their 'usual place of abode' outside the UK receives rental income from UK property.
By default, HMRC obliges UK letting agents to deduct basic rate income tax (currently 20%) from the landlord's gross rental receipts, after deducting allowable expenses paid by the agent, and remit that tax quarterly to HMRC.
If there is no letting agent and the rent exceeds £100 per week, the tenant must withhold the tax themselves. This often causes administrative friction and distress for tenants.
Applying for gross payment using Form NRL1
To stop the 20% deduction, overseas landlords can apply to HMRC to receive rental payments with no tax deducted. You can apply if:
- Your UK tax affairs are completely up to date, or
- You have never had any UK tax obligations before, or
- You do not expect to be liable to UK income tax for the tax year in which the application is made.
Claiming your £12,570 UK Personal Allowance on SA109
Many non-resident landlords suffer unnecessary tax deductions because letting agents deduct tax from rent without taking the UK Personal Allowance into account.
Under Section 56 of the Income Tax Act 2007, British citizens and EEA nationals are entitled to the full £12,570 Personal Allowance regardless of where in the world they reside.
When Matthew prepares your annual return, we claim the allowance on Box 16 of supplementary form SA109. If your letting agent has already deducted tax at source, this usually generates an immediate cash tax refund from HMRC.
Allowable expenses and Section 24 mortgage interest
Non-resident landlords can deduct all wholly and exclusively incurred revenue costs from their rental income before calculating profit.
Stop letting agents deducting 20% from your rent...
Matthew (Chartered Tax Adviser) prepares your Form NRL1 application, secures HMRC approval for gross payment, and files your non-resident tax return with full Personal Allowance claims.
- Letting agent commissions and management fees
- Landlord insurance policies (building, contents, and rent guarantee)
- Repairs, maintenance, and safety certificates (gas, electrical, EPC)
- Accountancy fees for preparing your property accounts
- Section 24 finance cost relief: residential mortgage interest is relieved via a 20% tax credit against your UK tax liability
Written and reviewed by Matthew S Manderson CTA ATT AMIT
Chartered Tax Adviser (CTA), Association of Taxation Technicians (ATT), Association of Malta International Taxation (AMIT). General guidance only; tax treatment depends on individual facts.