Non-Resident Landlord Scheme (NRLS)

Key facts

The NRLS applies to landlords whose “usual place of abode” is outside the UK.
Tenants or letting agents must deduct basic-rate tax (20%) from the rent and pay it to HMRC — unless the landlord has HMRC approval to receive rent gross.
Landlords can apply to HMRC using form NRL1 to receive rent without tax deducted.
Non-resident landlords must still file a UK Self Assessment return each year.
The NRLS is separate from the non-resident CGT rules that apply when you sell.

Overview

The Non-Resident Landlord Scheme (NRLS) is an HMRC tax collection mechanism for landlords whose usual place of abode is outside the UK. Under the scheme, tenants or letting agents must deduct basic-rate Income Tax (20%) from the rent and pay it to HMRC, unless the landlord has been approved to receive rent without tax deducted.^[1]

Who Is a Non-Resident Landlord?

You are treated as a non-resident landlord if your usual place of abode is outside the UK. This includes:

UK nationals living abroad (expats)
Foreign nationals who own UK rental property
People who spend more than 6 months per year outside the UK
Companies with a registered address outside the UK

The key test is whether you normally live in the UK, not your nationality or domicile status.

How the NRLS Works

Step	Who	What Happens
1	Letting agent / tenant	Deducts 20% Income Tax from rent payments (after deducting allowable expenses if agent)
2	Letting agent / tenant	Pays the deducted tax to HMRC quarterly
3	Landlord	Receives net rent (80% of gross after expenses)
4	Landlord	Files UK Self Assessment return, claims credit for tax deducted

Letting agents vs tenants: If you use a UK letting agent, the agent is responsible for deducting tax and paying it to HMRC. The agent can deduct allowable expenses before calculating the tax. If you manage the property yourself and tenants pay you directly, the tenant must deduct tax — but only if the rent exceeds £100 per week.

Applying to Receive Rent Gross (NRL1)

You can apply to HMRC to receive your rent without tax deducted using form NRL1. If approved, your agent or tenant is told to pay rent gross and you account for tax through Self Assessment instead.^[2]

HMRC is more likely to approve your application if:

Your UK tax affairs are up to date (all returns filed and tax paid)
You have never had UK tax obligations before, or
You do not expect to be liable to UK tax (e.g. your rental profits are covered by your Personal Allowance)

Tip: Applying for gross payment is strongly recommended. Having 20% deducted from rent can create cash flow problems, especially if your actual tax liability is lower (e.g. because of mortgage interest tax credits and other expenses). With NRL1 approval, you settle your actual liability through Self Assessment.

Obligations of Letting Agents

UK letting agents managing property for non-resident landlords must:^[1]

Register with HMRC for the Non-Resident Landlord Scheme
Deduct 20% tax from rent (after allowable expenses) unless the landlord has NRL1 approval
Pay the tax quarterly to HMRC (by 5 July, 5 October, 5 January, 5 April)
Provide the landlord with an annual certificate showing tax deducted (form NRLY)

Self Assessment Obligations

As a non-resident landlord, you must file a UK Self Assessment return each year to report your rental income. On the return you:^[3]

Report your total rental income and claim all allowable expenses
Claim credit for any tax deducted under the NRLS
Pay any additional tax due, or receive a refund if too much was deducted

Non-resident individuals may still be entitled to the UK Personal Allowance (£12,570), depending on their nationality and any applicable tax treaties.

CGT When Selling as a Non-Resident

Non-resident landlords are also subject to CGT on the disposal of UK property. The 60-day reporting requirement applies. See our guides to CGT on rental property and non-resident CGT on UK property.

Frequently Asked Questions

What is the Non-Resident Landlord Scheme?

The NRLS is an HMRC scheme that requires tenants and letting agents to deduct basic-rate (20%) Income Tax from rent paid to landlords who live abroad. The deducted tax is paid to HMRC quarterly. The landlord can then claim credit for the tax deducted when filing their UK Self Assessment return.

How do I apply to receive rent without tax deducted?

Submit form NRL1 to HMRC. You must demonstrate that your UK tax affairs are up to date (or that you are not liable to UK tax). If approved, HMRC will notify your agent or tenant and they can pay rent gross. Approval is not automatic and may take several weeks.

Do I still need to file a UK tax return as a non-resident landlord?

Yes. Even if tax has been deducted under the NRLS, you must file a UK Self Assessment return to report your rental income and claim any allowable expenses. You claim credit for the tax already deducted, so you may receive a refund or have additional tax to pay.

What happens if my tenant does not deduct tax under the NRLS?

If a tenant fails to deduct tax when required, HMRC can pursue the tenant for the unpaid tax. Letting agents who fail to operate the scheme correctly can also face penalties. As the landlord, you remain liable for the correct amount of tax on your Self Assessment return.

Sources

Non-resident Landlord Scheme: guidance notes — GOV.UK
Apply to receive UK rent without tax deducted (NRL1) — GOV.UK
Non-Resident Landlords Scheme: landlord obligations — GOV.UK