If you have resided abroad for six months or more in a year, you are classed as a “non-resident landlord” and the income you collect from renting out your UK-based home whilst abroad is taxable in the UK.
Although this must be declared to HM Revenue & Customs (HMRC), you do not necessarily need to file a tax return. Non-resident landlords can choose to be taxed in one of two ways:
- Through self-assessment tax returns; these must be filed by the 31 January deadline if you do it online, or by 31 October if you elect to file a paper return. If you haven’t registered for self-assessment, you must do so by 5 October or within 3 months of your income being chargeable to tax.
- At source, which means basic-rate tax will be deducted by your letting agent or tenant.
If you choose to receive your rent in full and pay tax via self-assessment, you will need to fill in a NRL1i form, found here. If previous tax returns are outstanding, or if tax is owed, your application may not be approved.
Even if you are a non-resident landlord, you are still entitled to an annual personal tax allowance (currently £11,500).
You may also be required to pay Capital Gains Tax, if you make a gain when you sell residential property in the UK.
We know that property tax is a complex and constantly changing subject and we understand that, for landlords and property investors, effective tax planning can be a real pain point. That’s why our in-house property tax team are on hand to help and advise clients with property tax issues. To find out more about how we can help click here.