Where a landlord's usual place of abode is outside the United Kingdom, the letting agent must deduct tax at the basic rate from the rent before paying it over, unless HMRC has approved the landlord to receive it gross. The rate is 20%, and it is applied to the rent after allowable expenses rather than to the gross rent. The agent then files quarterly, files annually, and gives the landlord a certificate each July. This page sets out each of those obligations and its deadline.
Which agents are caught
An agent must operate the scheme where the agent's own usual place of abode is in the UK, the agent acts for a non-resident landlord in connection with the management or administration of the UK rental business, and the agent has power to receive that income or control over its direction.
There is no de minimis limit. HMRC's Property Income Manual is explicit that no threshold applies to rent paid to a landlord through a letting agent, so the size of the rent makes no difference.
The calendar, which is the part that goes wrong
Four dates matter, and missing them is an administrative failure rather than a tax dispute, which is why a landlord abroad is better served by an agent who does this routinely than by one doing it for the first time.
| Obligation | Form | Deadline |
|---|---|---|
| Register as an agent operating the scheme | NRL4 | Within 30 days of first needing to operate it |
| Quarterly return and payment | NRLQ | To reach HMRC within 30 days of the quarter end, being 30 June, 30 September, 31 December and 31 March |
| Annual information return | NRLY | By 5 July, for the year to 31 March |
| Certificate to the landlord | NRL6 | By 5 July |
The NRL6 is the one that matters to you rather than to HMRC. It is the document that lets you claim credit for the tax already deducted when you complete your own return, so a landlord who never receives one ends up either overpaying or arguing.
What the deduction is calculated on
Rental income after allowable expenses, not the gross rent. So the agent's own fees, and other deductible costs the agent knows about and has paid, reduce the figure the deduction is applied to. Expenses the agent does not know about cannot be taken into account, which is a practical reason to tell your agent about costs you pay yourself.
The deduction is not your final tax bill. It is a payment on account against your liability, settled through your own return.
How to stop the deduction
Apply to HMRC for approval to receive rent gross, on form NRL1 if you are an individual. HMRC notifies the agent directly, and the agent stops deducting from that point rather than from the date you applied. Our separate guide covers the application.
Where we stand
Trent Estate Agents is registered with HMRC under the scheme, so we operate it ourselves rather than referring it out. The quarterly submission is charged at £60 each quarter (including any VAT), and it stops if HMRC approves you to be paid gross, because there is then nothing to submit.
Questions we are asked
What rate is deducted?
The basic rate of income tax, 20%, applied to your rental income after allowable expenses rather than to the gross rent.
Is there a minimum rent below which the scheme does not apply?
Not where a letting agent is involved. HMRC's Property Income Manual confirms there is no de minimis limit for rent paid to a landlord through an agent. The £100 a week figure applies only where a tenant pays the landlord directly.
When should I receive my NRL6 certificate?
By 5 July each year, covering the year to 31 March. If you have not received one by then, ask, because it is the document that lets you claim credit for the tax already deducted.
Are the quarterly dates the same as the tax year quarters?
The scheme quarters end on 30 June, 30 September, 31 December and 31 March, and each return must reach HMRC within 30 days of the quarter end.
Does the deduction settle my tax?
No. It is a payment on account. Your liability is worked out on your own return, and the NRL6 evidences what has already been paid.
Sources
HMRC, Non-resident Landlords Scheme, notes for letting agents
HMRC Property Income Manual PIM4810
HMRC, Paying tax on rent to landlords abroad
General information about the law and practice in England. Not tax advice or legal advice.
