UK rental income when living abroad
Kept a UK property let out back home? The rent is still UK-taxable every year you are away. Here is how the Non-Resident Landlord Scheme works.
UK rental income is always UK-taxable, however long you are away — it is not "disregarded income". Under the Non-Resident Landlord Scheme (NRLS) your letting agent (or, if none, the tenant) must deduct basic-rate 20% tax from the rent and pay it to HMRC, unless HMRC approves you to receive it gross via form NRL1. Approval moves collection to Self Assessment; it does not make the rent tax-free (gov.uk NRLS; PIM4810; 2026/27).
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How does the Non-Resident Landlord Scheme work?
The scheme bites when your "usual place of abode" is outside the UK. Two routes:
- Without NRL1 approval, the agent or tenant withholds 20% of the rent (net of certain deductible expenses) and pays it to HMRC quarterly. You report the full profit on Self Assessment and get credit for the tax deducted.
- With NRL1 approval, you receive the rent gross — no tax withheld. HMRC approves if your UK tax affairs are up to date, then notifies your agent or tenant.
Does NRL1 approval make the rent tax-free?
How is mortgage interest treated?
Since the finance-cost restriction, mortgage interest is not deducted from rental profit — instead you get a basic-rate (20%) tax credit on it. This commonly catches landlords who assume they can still net the interest off the rent. The non-resident landlord estimator handles this correctly.
What is the bill on your rental?
The estimator handles the mortgage-interest trap correctly — a 20% credit, not a deduction.
Common questions
Do I pay UK tax on my UK rental income while living abroad?
Yes — UK rental income is always UK-taxable, however long you are away; it is not “disregarded income”. Under the Non-Resident Landlord Scheme your letting agent (or tenant) deducts 20% basic-rate tax unless HMRC approves you to receive it gross via form NRL1. Either way you report the profit through Self Assessment. (gov.uk NRLS; PIM4810; 2026/27.)
What is the Non-Resident Landlord Scheme?
The scheme applies where your usual place of abode is outside the UK. Your letting agent — or, if none, the tenant — must deduct basic-rate (20%) tax from your rental income (net of certain expenses) and pay it to HMRC, unless you are approved to receive rent gross. It moves collection; it does not make rent tax-free. (gov.uk NRLS; PIM4810; 2026/27.)
How do I apply to receive UK rent gross?
An individual non-resident landlord applies on form NRL1 to receive UK rent with no 20% deducted. HMRC approves where your UK tax affairs are up to date, then notifies your agent or tenant. You still report the rental profit through Self Assessment. (gov.uk NRL1 guidance; 2026/27.)