Answers · UK 2025/26

How does the Non-Resident Landlord Scheme work?

Under the Non-Resident Landlord Scheme, letting agents (or tenants paying more than £100/week rent directly) must withhold 20% basic-rate tax from UK rental income paid to a landlord who usually lives outside the UK, unless HMRC has approved the landlord to receive rent gross using form NRL1.

Last updated: 1 July 2026Last reviewed: 1 July 2026How we verify

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The Non-Resident Landlord Scheme (NRLS) is a withholding tax mechanism that ensures HMRC collects tax on UK rental income even when the landlord lives abroad and might otherwise be harder to pursue for unpaid tax. **Who counts as a non-resident landlord** The scheme applies to any individual, company, or trustee whose "usual place of abode" is outside the UK -- broadly, someone who is normally outside the UK for more than six months of the year -- and who receives UK rental income, regardless of their tax residence status for other purposes. **The default: 20% withholding** Unless the landlord has been approved to receive rent gross, the person paying the rent must withhold basic-rate Income Tax (20%) before passing the balance to the landlord: - **Letting agent involved**: the agent must withhold 20% from the rent (after deducting allowable expenses they have paid on the landlord's behalf) and pay it to HMRC quarterly. - **No letting agent, rent paid directly to a UK landlord's account**: if there is no agent, the tenant must withhold 20% themselves, but only if the rent exceeds £100 a week (or the equivalent for other payment periods). Below this threshold, no withholding is required from a tenant. The withheld tax must be paid over to HMRC within 30 days of the end of each calendar quarter (5 April, 5 July, 5 October, 5 January). **Applying to receive rent gross: form NRL1** A non-resident individual landlord can apply to HMRC using form NRL1 (NRL2 for companies, NRL3 for trustees) to receive rental income without the 20% deduction. HMRC will approve this if the landlord's UK tax affairs are up to date and they agree to file UK tax returns. Once approved, the agent or tenant pays the full rent, and the landlord accounts for and pays the actual tax due through Self Assessment. **Worked example** David lives permanently in Spain and rents out a UK flat through a letting agent for £1,200/month. Without NRL1 approval, the agent withholds 20% (£240/month) and pays it to HMRC, sending David £960/month. If David applies for and receives NRL1 approval, the agent pays him the full £1,200/month, and David instead declares his rental profit and pays the actual tax owed via Self Assessment by 31 January each year. **Why approval is usually worthwhile** Even where the withheld 20% roughly matches the landlord's eventual tax bill, NRL1 approval improves cash flow, since the landlord receives the full rent monthly rather than waiting for a refund after filing a tax return if allowable expenses (mortgage interest credit, letting agent fees, repairs) reduce the actual liability below 20% of gross rent.