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NRL Scheme

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The Non-resident Landlords (NRL) Scheme is a scheme for taxing the UK rental income of persons whose ‘usual place of abode’ is outside the UK. For convenience, these guidance notes refer to such persons as ‘non-resident landlords’. The Scheme applies to UK rental income paid to non-resident landlords from 6 April 1996. Different arrangements apply to UK rental income paid before 6 April 1996.

For non-resident landlords, Maxwell Properties must:

∙ deduct tax from the landlord’s UK rental income; and

∙ pay the tax to HMRC’s Accounts Office, Shipley

For the purposes of the NRL Scheme, the year runs from 1 April to the following 31 March. Letting agents and tenants who have to operate the Scheme must account for tax each quarter – that is, for the three-month period ending on 30 June, 30 September, 31 December and 31 March.

 

Below you will find some examples on how tax will be calculated:

 

Example 1

ABC Ltd is due to collect rental income of £5000 a quarter for Jean, who is a non-resident landlord. In one quarter it collects only £2500. It pays out £200 for gardening and cleaning.

The calculation is:

Rental income received £2500
Less deductible expenses paid £200
£2300
Basic Rate tax on £2300 (20% for 2015/16) £460

 

 

Example 2

ABC Ltd is due to collect rental income of £3000 a quarter for Joan, a non-resident landlord. But ABC Ltd authorises the tenant to pay £1000 to a third party in settlement of a loan (this is not a deductible expense).

The calculation is:

Rental income received £2000
Plus rental income paid away at ABC Ltd’s direction £1000
£3000
Basic Rate tax on £3000 (20% for 2015/16) £600

 

 

Example 3

If, in Example 2, ABC Ltd had authorised the tenant to pay £1000 to a builder to repair a leaking roof, instead of the payment to a third party to repay a loan, the £1000 would be a deductible expense.

The calculation would then be:

Rental income received £2000
Plus rental income paid away at ABC Ltd’s direction £1000
Less deductible expenses £1000
£2000
Basic Rate tax on £3000 (20% for 2015/16) £400

 

APPROVAL TO RECEIVE RENTAL INCOME WITH NO TAX DEDUCTED

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How non-resident landlords can apply ?

Most non-resident landlords who wish to receive their rental income with no tax deducted should apply for approval to PTI . However, landlords whose tax affairs are dealt with by HMRC’s Public Departments 1 office should apply to their tax office. The addresses and telephone numbers are shown on the application form NRL1i

 

The application must be made on one of the following forms, available from the HMRC website:

NRL1i – if the applicant is an individual

NRL2i – if the applicant is a company

NRL3i – if the applicant is a trustee (including a corporate trustee)

 

Non-resident landlords can apply for approval to receive their rental income gross on the basis that:

∙ their UK tax affairs are up to date; or

∙ they have never had any UK tax obligations; or

∙ they do not expect to be liable to UK tax for the tax year in which the application is made.

 

Sovereign immunity

Non-resident landlords who are a sovereign power and are exempt from UK tax because of sovereign immunity must apply to PTI if they wish to receive their UK rental income with no tax deducted. But they are not required to complete an application form. They can apply by writing to PTI, enclosing, where possible, a copy of the letter in which the HMRC confirms to them their ‘sovereign immune’ status.

 

When can an application be made?

You should make the application no more than three months before you leave the UK. HMRC cannot consider an application before then. If you have already left the UK, you can apply immediately.

 

Maxwell Property Ltd Non-residential Landlord Scheme registration number is: 904/NA055362

  

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