Are you Paying Unnecessary Tax and Letting Agent Fees on your UK Property?

Inheritance Tax
Do you need to pay tax in the UK as a non-resident landlord?

Yes, income from a property in the UK is usually subject to UK tax wherever you reside. However, depending on your nationality and country of residence, you may be entitled to the UK personal tax allowance (£11,500 for 2017/18). If the property is jointly owned, it should be possible to utilise two personal tax allowances.

How do I pay the tax?

Tenants or letting agents are required to deduct basic rate tax from any rent paid to non-resident landlords, unless the landlord has registered for the Non Resident Landlord Scheme. Registering for this scheme allows the landlord to receive rental income with zero tax withheld and then declare the correct amount of tax via self-assessment.

What are the benefits of registering for the Non Resident Landlord Scheme?

Your rental profits will still remain taxable in the UK via self-assessment but there are several benefits:

  1. Correct tax – the letting agent is not allowed to deduct expenses paid by the landlord directly in arriving at the profit figure, nor will the letting agent take into account any personal allowance available. Therefore tax is calculated against a higher profit figure, resulting in too much tax being paid.
  2. Cash flow – rather than having tax deducted at source each month, the tax is payable on 31 January following the end of the tax year (5 April).
  3. Minimise fees – letting agents typically charge up to £400 a year for withholding tax and paying it to HMRC. There is no way to get this cash back as it is a pure expense.
I have never registered for the Non Resident Landlord Scheme, therefore have overpaid tax for a number of years. Can I claim this tax back?

The simple answer is yes. It is necessary to register with HMRC for the Non Resident Landlord Scheme to ensure tax is not withheld going forward as well as submit tax returns retrospectively (or re-submit previous tax returns) to reclaim overpaid tax. It is a relatively straightforward process.

How can AAM help?

AAM work closely with a UK based, client focused chartered accountancy practice who can liaise directly with your letting agent to quantify the tax withheld, apply for the Non Resident Landlord scheme on your behalf and submit retrospective tax returns. No fee is payable if HMRC do not make a tax refund.

To find out more ask your AAM Financial Planner or email

Rock Advisory

Ian Black
Head of Wealth Solutions
AAM Advisory Pte Ltd

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