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Tax for UK Resident and Non-Resident Landlords
If you let out a property in the UK (including your home), tax is payable on the rental income you receive and you are deemed to be a Landlord. Landlords will need to declare this income on their Self Assessment Tax Return. If you don’t already complete a Tax Return you are legally required to notify HM Revenue and Customs (HMRC) of any liability you may have. Remember – if the property you are letting is jointly owned you should only be taxable on a proportion of the income you receive but both parties will need to complete a Tax Return.
HMRC legislation states that you will need to keep records of your income and expenses relating to the rental property for at least six years to support your Tax Returns.
Northwood will provide you with copies of any maintenance or work invoices undertaken on your behalf. We can also provide an annual statement of your account on request.
Tax for Non – Resident Landlords
HMRC legislation requires UK letting agents to deduct income tax at a current basic rate from a landlord’s gross rental income, for example after any deductions for maintenance invoices etc. The withheld tax is then passed to HMRC. You can, however, apply to HMRC to receive your rental income free of any tax deductions by completing an approval form.
The Northwood Guaranteed Rent Scheme works in a slightly different way. If a Landlord is guaranteed a value of £5,200 per annum or less then there is no need to apply for approval to receive your rental income without tax deduction. If there are two parties to the Guaranteed Rent contract, that value is doubled to £10,400.
If it is necessary for you to apply to HMRC for approval, Northwood can provide you with an application form or alternatively you can download the form directly from the HMRC website using the link: https://www.hmrc.gov.uk/cnr/nrl1.pdf
Once authorisation has been received from HMRC then we can pay rental income without deduction of tax at source.
If tax has been deducted from your rental income you will receive a certificate by 5th July following the end of the relevant tax year which details the total tax deducted from you during the last tax year.
Further information on the taxation of rental income for both UK and Non Resident Landlords is available by clicking the following links:
The content of this page is for general guidance only. It is based on current legislation at the time of publication, which may have been subject to change. Specific professional advice should be sought based on your personal circumstances. Northwood accepts no responsibility for any actions taken or refrained from on the basis of this information