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Wolverhampton Science Park
Creative Industries Centre
West Midlands
WV10 9TG is the trading name of Thandi Nicholls Ltd Chartered Accountants Registered Office Creative Industries Centre Glaisher Drive Wolverhampton WV10 9TG Registered in England Company Number 7319439 Directors K W Nicholls FCA S S Thandi BA. * Applies to new clients only
0800 907 8633
01902 711370

Mon to Fri 8 am - 5 pm
Self assessment for non-resident landlords

When am I treated as non-resident?
The first step is to ensure that you are not present in the UK for 183 days. If you are here for 183 days or more in any tax year, you are automatically resident for that tax year, subject to split year treatment if you permanently leave the UK, leave to work full time for at least a whole tax year or permanently come to the UK in the relevant year.

If you leave to work full time abroad, then it is easier to claim that you are not resident in the UK. Provided that you leave the UK and take up overseas employment for a whole tax year and you do not return to the UK for 183 or more days in any one year or an average of 91 or more days per annum over a period of four years, you will normally be treated as non-resident.

If you (or your spouse) are not employed abroad then you have to leave the UK either permanently or indefinitely to be treated as non-resident.

What is the effect of being non-resident?
Generally, you are only assessed to tax on income received in the UK. The main exception is that if you work for the Crown, the income is taxable in the UK wherever it is earned. There are double tax treaties with some countries which means that some income received from the UK may be taxed in your country of residence and may not be taxable in the UK.

However, income from a property in the UK is usually taxed in the UK wherever you reside. If you are a married couple with net rental income of less than 1,350 per month and you have no other UK income, then you should not be liable for income tax because the income would be covered by your personal allowance.

Tenants or agents have a responsibility to deduct basic rate tax from any rent paid to non-resident landlords. If you wish to continue receiving UK rental income gross whilst you are non-resident, you should submit Form NRL1 to the HMRC Centre for Non-Residents. HMRC should then grant approval for rents to be paid to you gross and notify the tenant or agent as appropriate. Your rental profits will still remain taxable in the UK but this will help with cash-flow.

You should also note that if you are non-resident for less than five whole tax years any capital gains which you make on properties sold whilst abroad may be taxed in the year you return unless those properties were acquired and disposed after you became non-resident. Otherwise there is no Capital Gains Tax if you are a non-resident.

You should also confirm your tax reporting requirements in the country where you reside with a local tax adviser.

Thandi Nicholls Ltd 2012 All Rights Reserved - The above article is provided for guidance only and may not cover your personal circumstances so you should not rely on it. It is important that you seek  appropriate professional advice which takes into account your personal circumstances where you can provide the full facts of the case and all documents related to your case. Thandi Nicholls Ltd t/a,  K Nicholls FCA or S Thandi cannot be held responsible for the consequences of any action or the consequences of deciding not to act.