The Non-Resident Landlord Scheme
Written and reviewed by the International Tax Accountants editorial team. Last reviewed 29 July 2026.
The Non-Resident Landlord Scheme is the way the United Kingdom collects tax on rental income where the landlord lives abroad but the property is here. It affects overseas individuals and overseas companies that let United Kingdom property, and it also places duties on the letting agents and tenants who pay the rent.
The scheme comes from the Taxation of Income from Land (Non-residents) Regulations 1995. Its central mechanism is a deduction of tax at source, so that the United Kingdom secures the tax before the money leaves the country, unless the landlord has been approved to receive rent without deduction.
The scheme reaches any landlord whose usual place of abode is outside the United Kingdom, and what matters is how the deduction works, how to apply to receive rent gross, and how the rules differ for companies after April 2020. A payment abroad from the same arrangement can also carry withholding tax on a cross-border payment, which is collected in a similar way at source.
Who the Scheme Applies To
The scheme applies where a landlord's usual place of abode is outside the United Kingdom and the landlord receives income from letting United Kingdom property. The test is the landlord's usual place of abode, which is not the same as tax residence, so a landlord can be within the scheme even for a period spent abroad.
The obligation to operate the scheme falls on the letting agent that handles the rent. Where there is no agent, it falls on the tenant instead, if the rent is above the level at which the tenant has to operate the scheme. Both need to know where the landlord usually lives.
How Tax Is Deducted at Source
Unless the landlord has been approved to receive rent gross, the agent or tenant has to deduct tax at the basic rate, currently 20%, from the rental income. The deduction is taken from the rent after allowable expenses that the agent has paid, not from the gross rent, so the amount deducted reflects the net letting income.
The tax deducted is paid over to HM Revenue and Customs and is credited to the landlord. It is a collection mechanism rather than a final tax, so the landlord's eventual liability is settled when the return is filed and the deduction is set against it.
Applying to Receive Rent Gross
A landlord can apply for approval to receive rent without any deduction, which improves cash flow and removes the deduction step for the agent. Individuals apply on form NRL1i, companies on form NRL2i and trustees on form NRL3i. General guidance on the scheme is available from HM Revenue and Customs at tax on UK income if you live abroad.
Approval does not remove the tax, it only removes the deduction at source. A landlord approved to receive rent gross still has to report the income and pay any tax due through the normal return. Approval can be withdrawn if the landlord does not keep its tax affairs up to date.
Companies Versus Individuals After April 2020
From 6 April 2020 non-United Kingdom resident companies with United Kingdom property income are charged corporation tax rather than income tax. The scheme still operates, so tax may still be deducted at source, but the company sets that deducted tax against its corporation tax and files a company tax return, the CT600, rather than the older return.
Individual non-resident landlords remain within Self Assessment and report their letting income there. Whether a non-resident individual is entitled to a personal allowance depends on nationality and on the relevant treaty, so that point should be checked and advice taken rather than assumed.