Non-Resident Landlord Scheme: NRL1, Tax & Returns 2026

If you live abroad and let out a property in the UK, the UK keeps the right to tax that rent. The Non-Resident Landlord Scheme is how HMRC collects it: by default, your letting agent or tenant takes basic rate tax off the rent before it reaches you.

You can apply to receive the rent in full instead, and file a UK tax return each year. For many non-resident landlords, that return, with the personal allowance and mortgage interest relief, shows little or no tax is actually due.

This guide explains who's in the scheme, how withholding works, how to apply to receive rent gross, how your rental profit is taxed, and what changes from April 2027.

What is a non-resident landlord?

Are you in the scheme? HMRC treats you as a non-resident landlord if you have UK rental income and your usual place of abode is outside the UK. In practice, that generally means being abroad for six months or more a year.

That's a different test from the Statutory Residence Test. If you're non-resident under the SRT, you'll almost always be in the scheme. But you can also be in the scheme while still UK resident for tax, for example in the year you leave or during a long posting abroad.

• Individuals: apply to receive rent gross on form NRL1.

• Companies: a company is a non-resident landlord if its main office is outside the UK or it's incorporated abroad, unless it's UK resident for tax. It applies on form NRL2.

• Trusts: a trust is in the scheme if all the trustees usually live outside the UK. It applies on form NRL3.

👉 HMRC guidance: what the Non-Resident Landlords Scheme is

The default position: tax taken from your rent

Who actually pays the tax? Unless HMRC has approved you to receive rent gross, the person paying you the rent has to deduct it.

Image 1 — withholding or gross payment

• Letting agents: an agent who collects your rent must deduct basic rate tax, currently 20%, from the rent less any deductible expenses they've paid for you, such as their fees and repairs. They pay it to HMRC quarterly and give you a certificate at the end of the tax year.

• Tenants: if you don't use an agent and your tenant pays more than £100 a week, the tenant must deduct the tax and pay it to HMRC.

• From 6 April 2027: the withholding rate becomes the new property basic rate of 22%.

Tax withheld isn't a final tax. It counts towards your UK liability for the year, and if too much was taken, you get it back through your tax return, or on form R43 if you don't file one.

How to receive your rent gross: the NRL1 application

How do you stop the deductions? Apply to HMRC on form NRL1, which you can do online. If HMRC approves it, it tells your agent or tenant to stop deducting tax and you pay any tax through Self Assessment instead.

HMRC will approve you if your UK tax affairs are up to date, you've never had any UK tax obligations, or you don't expect to owe UK tax for the year. It won't approve an application if you're behind with returns or payments. Joint owners each need to apply separately.

Approval takes effect from the date on HMRC's notice to your agent or tenant, so it isn't backdated. Apply as soon as you know you'll be letting from abroad, ideally before the first rent is paid, and remember that approval brings an obligation to file a return every year.

👉 HMRC service: apply to receive UK rental income without tax deducted (NRL1)

Your annual UK tax return

Do you still need a tax return? Yes. HMRC expects non-resident landlords to declare their rental income on a Self Assessment return unless it tells you otherwise, whether or not tax has been withheld and whether the property made a profit or a loss. The return includes:

• SA100: the main return.

• SA105: the UK property pages, for rent and expenses.

• SA109: the residence pages, where you confirm you're non-resident and can claim the personal allowance.

HMRC's own online service can't file the SA109, so you'll need commercial software, an adviser, or a paper return. The deadline is 31 October for paper and 31 January for online filing, and any tax is due by 31 January. See do I need to file a UK tax return? for the wider rules.

👉 HMRC guidance: tax on your UK rental income if you live abroad

Can you claim the personal allowance?

Will the first £12,570 be tax-free? Only if you're entitled to the personal allowance as a non-resident. You usually are if you're a UK or EEA national, have worked for the UK government, or are resident in a country whose tax treaty with the UK gives you the allowance.

If you qualify, the allowance can cover much or all of your rental profit. If your only UK income is dividends and interest alongside the rent, compare the normal calculation with the disregarded income basis, which drops the allowance but can remove tax on the investment income.

👉 HMRC guidance: personal allowance if you live abroad

How your rental profit is worked out

What can you deduct? Costs incurred wholly and exclusively for letting the property, including:

• Letting and management fees: agent commission, tenant-finding fees and inventory costs.

• Insurance: buildings, contents and rent guarantee cover.

• Repairs and maintenance: restoring the property to its previous condition. Improvements, such as an extension, aren't deductible from income but may reduce a future gain.

• Replacing furnishings: the cost of like-for-like replacement of furniture, appliances and kitchenware.

• Running costs: utilities, council tax and service charges, where you pay them rather than the tenant.

• Professional fees: accountancy fees and the legal costs of renewing a lease.

Mortgage interest is relieved differently

Mortgage interest and other finance costs aren't deducted from your rent. Instead, you get a tax credit of 20% of the interest, which reduces your tax bill. The credit is limited to 20% of the lowest of your finance costs, your property profit, and your income above the personal allowance, with any unused interest carried forward.

Image 2 — what's withheld against what's due

Worked example: renting out a Manchester flat from Singapore

• James lives in Singapore and lets his Manchester flat for £18,000 a year. His agent's fees are £2,160, and insurance and repairs paid by the agent are £1,840.

• Without NRL1 approval, the agent withholds 20% of £14,000, which is £2,800 in the year.

• James also pays £6,000 of mortgage interest. As a British citizen, he can claim the £12,570 personal allowance.

• His profit of £14,000 less the allowance leaves £1,430 taxable, so £286 of tax. His finance cost credit is capped at 20% of that £1,430, which is also £286, so his bill is nil.

• The £4,570 of interest not yet relieved carries forward, and the £2,800 withheld comes back to him through his return.

What changes from April 2027?

Why plan now? The 2025 Budget changes the tax on rental income from 6 April 2027 in England, Wales and Northern Ireland:

• New property rates: rental profit is taxed at a property basic rate of 22%, a property higher rate of 42% and a property additional rate of 47%.

• Finance costs: the mortgage interest credit rises to 22%.

• Withholding: agents and tenants withhold at the property basic rate of 22%.

• Allowance ordering: your personal allowance is set against other income, such as a UK pension, before property income. If you have both, more of your rent will be taxed.

Making Tax Digital for Income Tax also applies to non-resident landlords, based on UK property and self-employment income. HMRC has deferred it to April 2027 for people who file the SA109, when the threshold will be £30,000 of qualifying income.

👉 HMRC technical note: changes to tax rates for property, savings and dividend income

Selling the property: the 60-day deadline

What happens if you sell? Non-residents are within UK capital gains tax on all UK land and property. You must report the sale and pay any tax within 60 days of completion, not exchange, and the report is needed even if there's no tax to pay. To get a feel for the bill before you list the property, try our non-resident capital gains tax calculator.

Residential property owned since before 6 April 2015 can usually be rebased to its value on that date. See our guide to non-resident capital gains tax, and if you're planning a sale within a few years of leaving, check the temporary non-residence rules.

👉 HMRC guidance: selling UK property if you live abroad

Behind on your UK rental tax?

What if you've never told HMRC about the rent? It's common for people to move abroad, let their home, and assume that a small profit or a loss meant there was nothing to report. HMRC's Let Property Campaign lets you bring past years up to date on better terms than if HMRC finds you first. See our guide to the Let Property Campaign.

Frequently asked questions

How are non-resident landlords taxed in the UK?

Non-resident landlords still pay UK tax on the profit from UK rental property, wherever they live. Under the Non-Resident Landlord Scheme, your letting agent, or your tenant if the rent is more than £100 a week, must take 20% tax off the rent before paying you, unless HMRC has approved your NRL1 application to receive it in full. Receiving rent in full does not make it tax-free: you still file a Self Assessment return each year, claiming your allowable expenses. If you sell the property, you must report the sale within 60 days.

What does the NRL1 form do?

It's your application to HMRC to receive UK rent without tax deducted. If approved, HMRC tells your agent or tenant to stop withholding tax, and you pay any tax due through your annual Self Assessment return instead.

Can a non-resident landlord claim the personal allowance?

Often, yes. UK and EEA nationals, people who have worked for the UK government, and residents of some treaty countries can claim it. You claim it on the SA109 residence pages of your return, or on form R43 if you don't file a return.

Do I still need a tax return if my letting agent deducts tax?

Usually, yes. HMRC expects non-resident landlords to declare rental income on a return unless it tells you otherwise. The return is also how you reclaim tax that was over-withheld, for example where your personal allowance covers the profit.

Am I a non-resident landlord if I'm still UK tax resident?

You can be. The scheme looks at your usual place of abode, which HMRC generally treats as abroad if you're away for six months or more. That can apply in a year when the Statutory Residence Test still makes you UK resident.