HMRC internal manual

International Manual

INTM370010 - The Non-resident Landlords Scheme: Overview of the Scheme


The Non-resident Landlords Scheme is a scheme for taxing the UK rental income of landlords whose usual place of abode is outside the UK (‘non-resident landlords’). The underlying legislation is at ITA07/S971 and SI1995/2902.

The Scheme began on 1 April 1996 and is now the technical responsibility of Personal Tax International (previously CAR Residency). Audit support is provided by the NRL Audit team within PTI.


HMRC has published detailed guidance for letting agents and tenants about how to operate the scheme. There is also a booklet called “The Non-resident Landlords Scheme: Guidance Notes for Letting Agents and Tenants” which tells people what their responsibilities are under the scheme..

The guidance is available on the GOV.UK website which contains links to forms for use by landlords and letting agents. The booklet can be accessed also at the GOV.UK website.

Main points

The Scheme requires anyone in the UK who pays rent to, or collects rent for, a non-resident landlord to deduct basic rate tax from the rent. The people it mostly affects are letting agents, which can be anyone from a professional letting company to a friend or relative appointed by the non-resident landlord. The Scheme applies to letting agents regardless of the amount of the rent involved. If the non-resident landlord does not have a letting agent, his tenant must deduct the tax - but only if the rent is more than £100 a week.

Before calculating the tax, the letting agent/tenant takes off deductible expenses (see Chapter 10 of the Non-resident Landlords Scheme - Guidance Notes for Letting Agents and Tenants). These are broadly the same, but not as numerous, as the allowable expenses for property income purposes.

The Scheme allows non-resident landlords to apply to HMRC to have their UK rent paid to them gross. HMRC approves such applications on the understanding that the non-resident landlords will self assess at the end of the year to determine whether they have any liability on the rent. HMRC’s approval to receive rent gross does not mean that the rent is exempt income in the hands of a non-resident landlord, who must therefore include the rent in any tax return HMRC sends them.

The requirement on the part of letting agents and/or tenants to deduct tax does not apply to non-resident landlords who have successfully obtained HMRC approval to have their UK rent paid to them gross. We write to the letting agents/tenants of gross-approved non-resident landlords to tell them that they may pay rent without deducting tax.