Non-Resident Landlord Scheme
The Non-Resident Landlord Scheme (NRLS) is the HMRC system that governs how UK tax is collected on the rental income of landlords whose usual place of abode is outside the UK for six months or more. Under it, a letting agent, or the tenant where there is no agent, deducts basic-rate tax at 20% from the rent before the landlord is paid, unless HMRC has approved that landlord to receive the rent gross. According to HMRC's Property Income Manual at PIM4810, approval changes only how the tax is collected, not whether it is owed.
Who the scheme applies to
The scheme applies to any overseas landlord, meaning anyone receiving rent from UK property whose usual place of abode is outside the UK, which HMRC treats as living abroad for six months or more in a tax year. It catches individuals, companies and trustees, and a British passport makes no difference. Our overseas landlord entry covers who counts and the wider duties of the role, so this page stays on how the scheme itself works.
How the scheme works
The scheme collects tax at source. Your letting agent must deduct basic-rate Income Tax at 20% from your rental income after allowable expenses and pay it to HMRC each quarter. Where there is no letting agent, the tenant takes on that duty, but only if the rent is more than £100 a week. The figure deducted is not your final tax bill, it is tax taken on account, and any difference is settled later. This is why your rent can arrive lighter than expected if no gross approval is in place.
Receiving your rent without tax deducted
You do not have to accept the deduction at source. To stop tax being withheld before you are paid, you apply to HMRC for gross payment status using the NRL1 form, with the NRL2 used by companies and the NRL3 by trustees. Approval is usually granted where your UK tax affairs are up to date and you undertake to keep them so. Receiving rent gross does not exempt you from UK tax. It simply means you pay what is due through Self Assessment rather than having it taken upfront, which protects your cash flow across borders. From working with overseas landlords who let a single UK home after moving abroad, gross payment status is the one change that does most to keep cash flow predictable across borders.
Reporting rental income through Self Assessment
Whether or not your rent is taxed at source, rent from UK property remains chargeable to UK tax, and you report it through Self Assessment on the SA105 UK property pages, alongside the residence pages where relevant. No double taxation convention moves that right to another country, though your country of residence may give double taxation relief for the UK tax you have paid. Records must be kept to support every figure. Landlords using August to hold their UK records from abroad find that the work is mostly in the keeping, not the filing: with each payment and expense already in HMRC categories, the return is a matter of reading off totals rather than reconstructing a year from bank statements in another time zone. For a fuller walkthrough, our guide to the Non-Resident Landlord Scheme covers gross payment, double taxation and filing in depth.
The law behind the scheme
The Non-Resident Landlord Scheme operates under sections 971 and 972 of the Income Tax Act 2007 and the Taxation of Income from Land (Non-residents) Regulations 1995 (SI 1995/2902). HMRC's full summary sits at PIM4810. These provisions are unaffected by the Renters' Rights Act, which changes tenancy law rather than tax, so the scheme continues to apply in the same way through 2026. August is built for exactly this position, giving overseas and non-resident landlords one place to track rent, compliance and HMRC records on a UK property from abroad.
Frequently asked questions
Do I still pay UK tax if I live abroad?
Yes. Rent from a UK property is taxed in the UK wherever you live. The Non-Resident Landlord Scheme sets how that tax is collected, either at source by your agent or tenant, or through Self Assessment if you have gross payment approval.
Who deducts the tax, my agent or my tenant?
Your letting agent, if you use one. If you have no agent, the responsibility passes to your tenant, but only where the rent is more than £100 a week. Below that, a tenant with no agent is not required to operate the scheme.
What happens if I do not apply for gross payment?
Nothing is lost, but 20% is deducted from your rent before you receive it and paid to HMRC on account. You reclaim any overpayment, or settle any shortfall, when you file your Self Assessment return.
