Self assessment for overseas landlords

If you’re a non-resident landlord letting out a property in the UK, you’re obliged to complete a self-assessment income tax return. Our aim here is to provide overseas landlords with clear guidance on their tax obligations and the necessary documentation required for compliance with HMRC.

The tax year runs annually from April 6th to April 5th the following year. As a taxpayer, it’s your duty to inform HMRC that you’ll be preparing a tax return for the year when the income first arises, and this should be done by the following October 5th.

Any tax liabilities for a particular tax year (year one) are due on January 31st of the following year (year two).

Payment on Account:

If your liability for year two exceeds £1000, you must pay on account half of your year one liability on January 31st in year two and the other half on July 31st in year three.

If your liability for year two is higher than your payments on account, the balance is due on January 31st in year three, along with any expected payment on account for that year.

Your liability for year two will be refunded, along with a small repayment supplement if it’s less than the payments on account made earlier.

Payments on account can be reduced if you expect your tax liability to be lower in year two and you declare this. However, it’s essential to be certain because interest will be charged in case of underpayment.

Let’s illustrate with an example:

Jennifer, an American citizen, rented out her UK property in September 2022 for £15,000 with allowable expenses of £3,000 per year.

Her responsibilities include:

• •  Ensuring tax at the basic rate is deducted and remitted to HMRC by her managing agent or tenant.
  •  Registering with HMRC using form NRL1 if she wishes to receive her income gross without deduction of tax.
  •  Informing HMRC by October 5th, 2023, about her first rental income profits if she hasn’t completed form NRL1.
  •  Filing paper tax returns for 2022/23 by October 31st, 2023, if she wants HMRC to calculate her tax liability.
  •  Submitting an electronic tax return by January 31st, 2024, to avoid a £100 penalty for late submission.

Jennifer’s tax liabilities for 2022/23 and 2023/24 are £1,400 and £2,400, respectively, with payments due on specified dates.

From April 6th, 2015, non-residents became liable for Capital Gains Tax on property sales in the UK. An online tax return must be completed and Capital Gains Tax paid within 60 days of selling a property.

Penalties apply for late filing or payment, and interest is charged for late payments. If you’re unable to pay, contact HMRC to arrange a payment plan.

For further assistance or clarification, please contact HMRC or seek professional advice.