UK expat with a rental property back home?
Your UK rent is not tax-free (even if you’re non-UK resident)..
This one still surprises me.
I speak to loads of expats (especially UAE-based) who genuinely believe:
“I’m non-UK resident now… so the UK rental income is tax-free, right?”
Nope.
And this is usually the point where people split into two camps:
The “beach head-in-the-sand” crew
The “ok Kate, tell me what to do and let’s sort it” crew
If you’re reading this, I’m guessing you’re crew #2. Good choice.
Because HMRC might not be knocking today, but they’re absolutely getting better at joining the dots. They receive information from more than 30 different sources/databases and use that data to spot gaps and inconsistencies.
And when HMRC do catch up, it’s rarely just “pay the tax and we’re friends again”. It can come with interest and penalties, and a whole lot of stress you did not move abroad for.
So for the avoidance of doubt, here’s the actual position.
The golden rule: UK property rent is taxable in the UK (even if you live abroad)
If you rent out UK land or property, that rental income sits in a UK property business, and it’s chargeable to UK tax.
Individuals pay UK Income Tax on their UK rental profits.
Non-UK resident companies pay UK Corporation Tax on profits from UK property (this moved to Corporation Tax from 6 April 2020).
So no, it doesn’t become “tax free” just because you’ve swapped drizzle for sunshine.
“But I’m non-resident…”
HMRC looks at your usual place of abode for the withholding scheme
Here’s where it gets spicy.
The Non-Resident Landlord Scheme (NRLS) isn’t based on whether you’re resident under the Statutory Residence Test.
It’s based on whether your usual place of abode is outside the UK.
HMRC’s general view is that if you’re living abroad for 6 months or more, you’re treated as having a usual place of abode outside the UK for the duration of that stay abroad.
What happens in practice: tax can be deducted before you receive the rent
Under the NRLS, tax is usually withheld at source from your rental income.
If you have a letting agent
Your UK letting agent must:
calculate tax each quarter on the rent they’ve received less allowable expenses they’ve paid, and
pay that tax to HMRC quarterly.
If you don’t have a letting agent
Your tenant may have to operate the scheme if the rent they pay is over £100/week.
A tenant paying £100/week or less usually doesn’t have to operate the scheme, unless HMRC specifically directs them to.
The bit people miss
Even if tax is withheld under NRLS, that’s not the final answer.
Your final UK tax position is normally settled through Self Assessment. That’s where you declare the income properly, claim allowable expenses, and reconcile what’s already been deducted.
Can you receive your rent gross (without tax being deducted)?
Yes, you can apply to have rent paid without UK tax deducted at source.
If you’re an individual, that’s form NRL1 (online or by post).
HMRC may approve gross payment where, broadly:
your UK tax affairs are up to date, or
you’ve never had UK tax obligations, or
you don’t expect to be liable to UK income tax for the year.
But (and I cannot stress this enough):
Getting rent paid gross does not mean the income is tax-free. It just means you’re paying the tax through Self Assessment instead of via withholding.
Allowable expenses and mortgage interest: quick reality check
Your taxable rental profit is basically:
Rental income
minus allowable expenses (wholly and exclusively for the property business).
Typical examples include letting agent fees, insurance, repairs (not improvements), safety certificates, service charges (where relevant), and other genuine running costs.
Mortgage interest is the one that catches people out:
For individual landlords of residential property, mortgage interest doesn’t reduce rental profit in the old-fashioned way. Instead, you usually get a basic rate (20%) tax reduction for finance costs, subject to the rules.
Selling the property: non-residents still have UK reporting (and fast deadlines)
If you sell UK property while non-UK resident, you can be within the UK rules for Capital Gains Tax on UK property.
Two key points:
Non-UK residents generally must report disposals of UK property/land, even if there’s no tax to pay in some situations.
For UK residential property, you must report and pay any CGT due within 60 days of completion.
Miss that deadline and you can face interest and penalties.
“HMRC haven’t said anything… so I’m probably fine?”
I get why people think that.
But “no letter yet” is not the same as “no problem”.
Between:
NRLS reporting,
property sales reporting,
and HMRC’s increasing ability to cross-check information using shared datasets,
…ignoring it is a bit like ignoring a leaking pipe because it hasn’t flooded the kitchen yet.
What to do now (simple, practical, no panic)
If you’re an expat with UK rental property and you’re not sure it’s been handled correctly, here’s the sensible order:
Work out what’s been happening
Who’s collecting the rent? Agent or tenant? Has NRLS been operated?Get your records straight
Rental income, expenses, finance costs, compliance paperwork.Decide whether gross rent approval makes sense
(NRL1 for individuals)Get the UK tax reporting up to date
Usually Self Assessment for individuals, and the correct regime for companies.If there’s historic exposure, deal with it early
It’s almost always less painful when you take control first.
Want us to sort it with you?
At Boffin International, we help UK expats get their UK property tax position clean, compliant, and stress-free, so you can go back to enjoying the sunshine without that “HMRC might email me” feeling.
If you want, send us the basics (country you live in, whether you have an agent, rough annual rent, and whether you’ve filed UK returns recently) and we’ll tell you the quickest route to getting it fixed.
