HMRC are writing directly to the tenants of UK properties owned by non-resident companies; telling them that they may need to deduct tax from the rent before paying it to the landlord.

Currently, non-resident individuals who own and let out property in the UK are subject to Income Tax and the Non-Resident Landlord Scheme (RLS). From April 2020, non-resident companies will also be taxed to Income Tax (rather than Corporation Tax) on rental income arising in the UK; and could also be caught by the NRLS.

Basically, a non-resident landlord has two options. They can register for self-assessment and be sent an annual tax return: declaring the rent and paying the tax themselves. Or, they don’t register for the NRLS, in which case the tenant is responsible for deducting tax at source from the rent; and paying that tax over to HMRC.

HMRCs’ Wealthy and Mid-sized Business Compliance unit is now writing to tenants telling them to deduct tax if they don’t pay through a letting agent and the rent is more than £100 per week: unless the landlord registers for the NRLS.

What does this mean for me?

If you run a non-resident company which owns property in the UK, then you will generally be better off registering for the NRLS. That way you will be taxed on the profits you make, rather than tax being deducted from the gross rent. If you are a tenant then you probably want to encourage your landlord to register for the NRLS, so that you do not have to operate the tax deduction scheme, and be responsible for it.

How can Lynam Tax Enquiry Experts help me?

If you are a non-resident landlord then your affairs are coming under greater scrutiny. You may wish to review your affairs to see if a voluntary disclosure is required: in advance of HMRC launching a full-scale investigation. Lynam Tax have massive amount of experience and skills in this area.

*For a free, confidential and no obligation discussion call today:

Paul Lynam: 0845 643 9997
or Andrew Nutbrown: 0771 877 8710