The Non Resident Landlord Scheme makes UK letting agents, and tenants who pay more than £100 a week direct to a landlord abroad, deduct basic rate tax from rent after allowing for deductible expenses they pay, and send it to HMRC quarterly. A landlord whose usual place of abode is outside the UK can avoid the deduction by applying to HMRC on form NRL1, NRL2 or NRL3 for approval to receive rent gross and pay through Self Assessment instead.

Who counts as a non resident landlord?

The scheme rests on sections 971 and 972 of the Income Tax Act 2007 and on regulations made in 1995 (SI 1995/2902) that apply to rent received from 6 April 1996. It applies to landlords whose “usual place of abode” is outside the UK. That is not the same test as tax residence. HMRC normally treats an individual who is absent from the UK for six months or more as having a usual place of abode abroad, and says a person can be UK resident for tax purposes and still be within the scheme.

  • Companies normally have a usual place of abode abroad if their main office or place of business is outside the UK or they were incorporated outside the UK. A company that is UK resident for tax, or a UK branch of an overseas company that pays Corporation Tax, is outside the scheme. Non UK companies have paid Corporation Tax on UK property profits since 6 April 2020, but the scheme still applies to them.
  • Trusts are within the scheme only if all the trustees have a usual place of abode abroad.
  • Partnerships: each partner is treated as a separate landlord for their share.
  • Joint owners: tax is due only on the share belonging to the owner abroad. If one spouse lives in the UK and the other abroad, only the overseas spouse’s share is within the scheme. See jointly owned rental property for how the shares are fixed.
  • Members of HM Armed Forces and other Crown servants posted abroad are treated like any other landlord.

Who has to operate the scheme?

Letting agents must operate it whatever the amount of rent, unless HMRC has told them in writing that the landlord may be paid gross. For the scheme, a letting agent is someone living in the UK for more than six months a year who helps the landlord run the UK rental business and receives the rent or controls where it goes. That can include an estate agent, solicitor, accountant or a friend. Giving legal advice alone does not make someone an agent. A tenant finder who collects rent only to recover a fee does not have to operate the scheme if they collect no more than three months’ rent and the tax would be no more than £100.

Tenants must operate it if there is no UK letting agent and they pay, on average, more than £100 a week to the landlord, to a person abroad or to anyone else who is not a letting agent. The guidance puts this as £5,200 a year per landlord, reduced proportionately for a shorter tenancy. Where several tenants are named on the lease, the limit applies to each tenant’s share of the rent. Paying into the landlord’s UK bank account still counts as paying the landlord directly. A tenant must also operate the scheme if HMRC sends a notice telling them to.

An agent or tenant who has no reason to believe the landlord lives abroad need not make special enquiries, but HMRC warns that a PO box or “care of” address is not evidence that the scheme does not apply.

How is the tax worked out?

The scheme year runs from 1 April to 31 March, split into quarters ending 30 June, 30 September, 31 December and 31 March. For each landlord and each quarter:

  1. Add up all rent received (or, for a tenant, paid) in the quarter, including amounts paid to third parties at the landlord’s request. Use what was actually paid in the quarter, not what fell due.
  2. Deduct expenses the agent or tenant paid in the quarter that they can be “reasonably satisfied” are allowable in the landlord’s rental business, such as repairs, insurance, ground rent and the agent’s own fees.
  3. Multiply the result by the basic rate of income tax.

Expenses the landlord pays personally, accrued but unpaid costs, capital expenditure and the landlord’s personal allowance cannot be deducted. HMRC’s list of deductible expenses notes that no interest can be deducted for residential property, because individual landlords get relief for finance costs separately as a tax reduction (see landlord mortgage interest relief). Agents acting for non UK company landlords must consider the Corporate Interest Restriction before deducting interest. An agent can net expenses on one property against rent from another property of the same landlord, but never across different landlords. Excess expenses in a quarter can be set against that landlord’s rent in earlier or later quarters.

HMRC’s own example: a tenant pays £1,500 in a quarter, made up of £1,200 to the landlord, £100 to pay off the landlord’s loan and £200 for plumbing repairs. The repairs are deductible, so tax is due on £1,300 at 20%, which is £260.

The basic rate is 20% for 2026 to 2027 (see UK tax rates for 2026 to 2027). At Budget 2025 the government announced a separate property basic rate of 22% from 6 April 2027 and said the withholding rate for the scheme would be updated to match.

What are the deadlines and forms?

Obligation Form Deadline
Register with HMRC (tenants contact HMRC to register) NRL4 for agents Agents: within 30 days of first needing to operate the scheme
Quarterly return and payment NRLQ To arrive within 30 days of the quarter end, for example by 30 October for the quarter to 30 September
Annual information return to HMRC NRLY By 5 July after the year to 31 March
Certificate of tax deducted to the landlord NRL6 By 5 July after the year to 31 March

No quarterly return is needed for a quarter with nothing to pay unless HMRC asks for one. HMRC may charge interest on late payments (see HMRC late payment interest) and penalties for failing to make a return or making an incorrect one, and a late registration can attract a penalty. Agents and tenants must keep records of rent, expenses with invoices, and any correspondence about where the landlord lives, for four years.

How does a landlord apply to receive rent gross?

Individuals apply on NRL1, companies on NRL2 and trustees on NRL3. HMRC will approve the application, and register the landlord for Self Assessment, if their UK tax affairs are up to date, they have never had UK tax obligations, or they do not expect to be liable to UK tax for the year of application. It will not approve someone who is behind with returns or payments. A person about to move abroad can apply no more than three months before leaving.

Approval works only once HMRC has told the agent or tenant in writing, and only for the person named. Where spouses both live abroad, each must apply separately; an agent must not pay one spouse gross on the strength of the other’s approval. HMRC can withdraw approval if information was wrong, the landlord stops complying or fails to supply information, and the landlord can appeal in writing within 90 days. Approval lapses on the landlord’s death.

What does the landlord still have to file?

Whether rent is paid gross or net, the landlord normally files a Self Assessment return with the UK property and residence pages (SA105 and SA109; see supplementary pages). GOV.UK says non resident landlords cannot use HMRC’s online return service and must file by post, through commercial software or through an agent, and the earlier 31 October paper deadline applies to a postal return. Tax deducted under the scheme is credited against the final liability. A landlord entitled to a personal allowance whose rental income is below it can reclaim tax deducted on form R43.

What are the common mistakes?

  • Assuming a landlord who is UK tax resident is outside the scheme, when the test is usual place of abode.
  • Paying rent gross on the landlord’s word that they have approval, without HMRC’s written notice.
  • Deducting the landlord’s mortgage interest, capital costs or expenses the landlord paid directly.
  • Tenants paying over £100 a week direct to a landlord abroad without registering.
  • Missing the 5 July NRLY and NRL6 deadline because the scheme year ends on 31 March, not 5 April.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.