Tax implications for non‑resident landlords in the UK

Owning a UK rental property while living abroad can be a reliable way to secure long‑term income, yet the tax implications for non‑resident landlords are often overlooked. Every April the rules shift – allowances shrink, rates move and HMRC deadlines tighten – and the organisation will not accept ‘I didn’t know’ as an excuse. The 2025/26 tax year is no exception. Overseas owners must handle the Non‑Resident Landlord Scheme (NRLS), possible withholding at 20%, and the latest capital‑gains obligations.

The sector is large and still growing: HMRC data show 2.84 million unincorporated landlords filed property income in 2022/23 (HMRC, 2025), while average UK private rents rose 6.7% in the 12 months to June 2025 (ONS, 2025). Treating tax as an afterthought, therefore, risks serious cash‑flow strain.

At Nicholas Peters & Co., we look after clients who collect rent from the UK while based in Europe, the Middle East, North America and beyond. In this guide we set out the latest tax implications for non‑resident landlords, explain how the numbers work in practice and show the steps that keep HMRC satisfied without denting cashflow. Whether you already file a UK tax return or are about to let your first property, the following points will help you plan sensibly and avoid unwelcome surprises.

Who counts as a non‑resident landlord?

You are classed as a non‑resident landlord if your “usual place of abode” is outside the UK for at least six months in a tax year, even if you remain UK‑resident under the Statutory Residence Test. HMRC looks at where you spend your days, not where your property sits. Members of the armed forces and Crown servants posted abroad fall within the definition, as do landlords who spend winters overseas but keep a UK home. Recognising this status is the foundation for the tax implications for non‑resident landlords – every other rule flows from it.

Income tax: Tax implications for non‑resident landlords

Most overseas owners fall under the NRLS. Unless you obtain HMRC approval to receive rent gross, your letting agent – or the tenant if you self‑manage – must withhold basic‑rate tax at 20% from net rent and send it to HMRC each quarter. You still file a self assessment return after 5 April so any extra tax or repayment can be calculated.

For 2025/26 the personal allowance is £12,570. Income tax applies at 20% up to £37,700, 40% up to £125,140 and 45% above that (HMRC, 2025). Non‑resident landlords usually keep the allowance provided returns are timely and no tax is overdue. If you own several UK properties the rents are pooled on one return. These figures sit at the heart of the tax implications for non‑resident landlords and determine how much withholding can be reclaimed.

Letting through a company is outside the NRLS and pays corporation tax at 25%. This can work if profits are reinvested, but extracting funds later may cost more. Speak to our tax planning team before incorporating.

Allowances and reliefs that still apply

Even when you live abroad you can still use:

• Personal allowance: £12,570 as above.
• Property allowance: Up to £1,000 gross rents can be taxed instead of claiming expenses.
• Marriage allowance: Transfer up to £1,260 of unused allowance to a UK‑resident spouse, saving up to £252.
• Rent‑a‑room relief: £7,500 for letting a furnished room in your own UK home.

Taking advantage of these measures mitigates the tax implications for non‑resident landlords and keeps cashflow healthy.

Mortgage interest and other allowable expenses

Mortgage interest relief now arrives as a 20% tax credit. Other deductible costs include:

• Repairs and maintenance: Day‑to‑day fixes, not improvements.
• Letting agent fees: Management, tenant‑find and compliance charges.
• Council tax and utilities: Only when you, not the tenant, foot the bill.
• Insurance premiums: Buildings, contents and rent‑guarantee cover.
• Professional fees: Accountancy, lease‑renewal legal costs and EPC certificates.

Recording these items clearly helps us challenge excessive withholding and softens the tax implications for non‑resident landlords.

Capital gains tax when you sell

Since 2015, non‑residents have paid Capital Gains Tax (CGT) on UK property sales. From 6 April 2025, you must:

• Report and pay CGT within 60 days of completion.
• Apply the annual exempt amount, now just £3,000 (HMRC, 2025).
• Use rates of 18% within the basic‑rate band and 24% above it.

Improvement costs and buying or selling fees increase your base cost. If you once lived in the property, lettings relief or private residence relief may cut the bill – ask us to review your figures before you exchange contracts. Understanding CGT is an essential part of the tax implications for non‑resident landlords.

Keeping compliant: Practical steps

Good process avoids penalties. Aim to:

1. Keep digital records: Scan receipts into cloud software.
2. Reconcile quarterly: Match bank and letting statements.
3. Diarise key dates: 31 January tax returns; 60‑day CGT submissions.
4. Budget for tax: Move 20% of rent into a separate account.
5. Review your mortgage: A better rate lifts cashflow.

Each habit reduces the tax implications for non‑resident landlords – and the stress that comes with them.

Common pitfalls and how to avoid them

• Forgetting the NRLS: Late registration means tenants deducting tax incorrectly.
• Missing the CGT 60‑day window: Penalties start at £100 and rise quickly.
• Confusing exchange and completion dates: CGT is triggered on exchange.
• Over‑claiming travel: Only visits wholly and exclusively for the property count.

A quick pre‑year‑end review stops these issues before they cost you money.

Ready to keep more of your rent?

The rules change regularly, and the smallest detail – from how your agent presents a repair invoice to when you sign the sale contract – can alter the outcome. By staying alert to the tax implications for non‑resident landlords and acting early, you protect both cashflow and long‑term return.

Our role is to translate legislation into plain steps you can follow wherever you are based. We liaise with agents, prepare digital accounts, reclaim excess withholding and file returns on time. Many clients also rely on us to model the tax cost of selling or refinancing before they commit.

If you would like tailored advice or a free review of last year’s figures, visit our contact page and book a 30‑minute call. We will help you understand the tax implications for non‑resident landlords in your specific situation and make the 2025/26 rules work in your favour.