What is a non-resident landlord? The NRL scheme explained

Many British people who move to Dubai or Abu Dhabi keep a property in the UK and let it. The rent stays within UK tax wherever the landlord lives, and the UAE levying no personal income tax does not change that. What changes is how HMRC collects it: through the non-resident landlord scheme (NRL scheme), in sections 971 and 972 of the Income Tax Act 2007 and the Taxation of Income from Land (Non-residents) Regulations 1995 (SI 1995/2902).

What is a non-resident landlord?

For the scheme, a non-resident landlord is someone with UK rental income whose usual place of abode is outside the UK. Individuals, companies and trustees can all be non-resident landlords.

There is no statutory definition of usual place of abode. HMRC’s practice is that an individual who is absent from the UK for six months or more is normally treated as having a usual place of abode outside the UK. It is a rule of practice, not a day-count test in the legislation.

For a company, the usual place of abode is normally outside the UK if its main office or place of business is outside the UK, or it was incorporated outside the UK. A company that is UK resident for tax purposes is treated as having a UK usual place of abode wherever it was incorporated. A trust is outside the UK only if all its trustees have a usual place of abode outside the UK.

Is that the same as being non-resident?

No. Tax residence is decided by the statutory residence test in Schedule 45 to the Finance Act 2013, which works through automatic tests, day counts and UK ties. Usual place of abode is a separate, more practical question about where someone normally lives, and HMRC’s guidance is explicit that the two can differ: a person can be UK resident under the statutory residence test and still have a usual place of abode abroad.

For someone settled in the UAE they usually point the same way, but not always — the year of departure is the common exception. Our guide to the statutory residence test for UK expats in the UAE covers residence itself.

Do non-resident landlords pay UK tax?

Yes. Profits from letting UK property are taxable in the UK whether or not the landlord lives here. The same rules for working out the profit apply as for a resident landlord: allowable expenses, the treatment of repairs and improvements, and the restriction on relief for finance costs on residential lets.

The NRL scheme does not set the amount of tax. It is a way of collecting tax at source, and the final figure is settled on the landlord’s return.

How the non-resident landlord scheme works

Where the scheme applies, someone in the UK is responsible for taking tax off the rent before it reaches the landlord abroad.

• A letting agent who collects rent for a non-resident landlord must register with HMRC and operate the scheme. Registration is on form NRL4.
• A tenant must operate it where there is no letting agent and the tenant pays rent of more than £100 a week directly to a landlord whose usual place of abode is abroad. HMRC can also direct a tenant paying less to operate it.

The agent or tenant works out the rent received in each quarter, deducts allowable expenses paid in that quarter, and accounts to HMRC for tax at the basic rate of income tax (20% for 2026-27) on the net amount.

The scheme runs on its own calendar, not the tax year:

The NRL6 matters to the landlord. The tax it shows can be set against the landlord’s UK tax liability for the year, so it needs to be kept and used on the return.

The calculation is deliberately rough. It ignores the personal allowance and differs from the rules for computing a rental profit, so the tax deducted can be more or less than the tax actually due.

From the 2027-28 tax year the government has announced separate income tax rates for property income, with a property basic rate of 22%, and has said the scheme’s withholding rate will be updated to match. The 20% figure above is the rate for 2026-27.

Receiving rent with no tax deducted: NRL1, NRL2 and NRL3

A non-resident landlord can apply to HMRC for approval to receive rent without deduction. The form depends on who owns the property:

• NRL1 for individuals;
• NRL2 for companies;
• NRL3 for trustees.

Each can be made online or on a printed form; where a tax adviser is to act, the printed form goes in with form 64-8. Joint owners who each have a usual place of abode abroad, including spouses and civil partners, are separate landlords and must apply separately; where only one lives abroad, the scheme applies to that person’s share alone.

HMRC normally approves an application where the landlord’s UK tax affairs are up to date, the landlord has never had UK tax obligations, or the landlord does not expect to be liable to UK income tax for the year of application. Approval is not automatic, HMRC tells the agent or tenant directly when it is given, and it can be withdrawn. An agent should not stop deducting tax on the landlord’s word alone.

Approval does not mean no tax

This is the most common misunderstanding about the scheme. Approval changes how the tax is paid, not whether it is payable. When HMRC approves an application, it registers the landlord for Self Assessment, and the rental income is then declared on a return each year with the tax paid by the normal deadlines.

The same is broadly true without approval. Tax deducted at source is a payment on account, not a final settlement: the landlord generally still needs a return to report the income, claim expenses the agent did not see, claim the personal allowance where available, and recover any tax deducted in excess of the liability.

A landlord who believed the agent was “dealing with the tax” may therefore have years of returns outstanding even though tax was deducted throughout.

Do non-resident landlords get a personal allowance?

Some do. A non-UK resident is entitled to the personal allowance only if they meet one of the conditions in section 56 of the Income Tax Act 2007. The ones that most often apply are being:

• a UK national or a national of an EEA state;
• resident in the Isle of Man or the Channel Islands;
• a person who is or has been employed in the service of the Crown, or whose late spouse or civil partner was.

Others may qualify through a double taxation agreement between the UK and their country of residence, depending on its terms. For 2026-27 the personal allowance is £12,570, and as for anyone else it is reduced by £1 for every £2 of income above £100,000.

For British expats in the UAE, the first condition usually settles it: a British citizen living abroad keeps the allowance. It is not given automatically, though. It is claimed on the Self Assessment return, or on form R43 by someone not otherwise filing one.

Non-resident companies that let UK property

Since 6 April 2020, a non-UK resident company with a UK property business pays corporation tax, not income tax, on its UK rental profits. The NRL scheme continues to apply to company landlords, and tax deducted under it can be set against the company’s corporation tax liability on that income.

Whether such a company must file corporation tax returns depends on its facts. It is worth checking rather than assuming nothing is due because tax was withheld.

Selling a UK property while living abroad

When a non-resident disposes of UK land or property, HMRC must be told within 60 days of completion, using the online service, and any capital gains tax paid in the same window. The requirement applies to residential and non-residential property, and whether or not there is a gain or any tax to pay. It is separate from the NRL scheme, and a letting agent operating the scheme has no reason to mention it. Our page for UK expats in the UAE sets out the wider position.

If rental income has not been reported

Two situations come up often. One is a landlord who never had the scheme operated and never filed a return. The other is a landlord whose agent deducted tax, and who assumed that was the end of it. Both may have income that was never declared on a return, and an obligation to notify HMRC that was never met.

Correcting that voluntarily is generally treated more favourably than waiting for HMRC to find it. It is also worth knowing that a letting agent operating the scheme reports the rent it collects for each non-resident landlord to HMRC every year on the NRLY. For individual landlords of residential property, at home or abroad, the Let Property Campaign is the usual route. Companies, trusts and commercial lettings use HMRC’s other channels, covered on our voluntary disclosures page. How many years a disclosure has to cover turns on the behaviour behind the omission; see how far back HMRC can investigate.

Sources

• Income Tax Act 2007, sections 971 and 972 (non-resident landlords), and section 56 (personal allowance for non-UK residents)
• The Taxation of Income from Land (Non-residents) Regulations 1995 (SI 1995/2902)
• HMRC, Property Income Manual PIM4800 onwards (the non-resident landlord scheme)
• HMRC, Non-resident Landlords Scheme guidance notes for letting agents and tenants
• Corporation Tax Act 2009, section 5, as amended by the Finance Act 2019 (non-resident companies with UK property income)
• Finance Act 2019, Schedule 2 (returns for disposals of UK land by non-residents)
• Finance Act 2013, Schedule 45 (statutory residence test)
• HM Treasury and HMRC, Income Tax: changes to tax rates for property, savings and dividend income (policy paper, 27 November 2025)

This guide is general information, not advice on any particular case.