HMRC are sending letters to tenants occupying residential property owned by landlords who are non UK residents (where there is no letting agency contracted to let the property) to remind them of the UK’s Non-resident Landlord Scheme. The letters also ask for a form to be completed with information about them and the property they are living in.
The information requested includes the amount of rent they are paying and where to, but also asks if the property is owned by a trust.
The Non-resident Landlord Scheme (NRL) was introduced to ensure that UK non-resident landlords pay tax on any income they get from renting out property in the UK as UK resident landlords do. This tax is collected using the NRL and can be paid by the letting agent. If there is no letting agent involved and a tenant pays over £100 a week, they need to register with HMRC and deduct tax at basic rate from the rent before paying it. If however the non-resident landlord opts to file UK tax returns instead and pay the tax that way, they can opt out of the NRL with HMRC. If this is approved by HMRC, a letter will be sent to the landlord to confirm and also to the tenant to confirm they can pay the rental income without deducting any tax first.
The letter that has been sent is causing concern for a number of reasons. Some of the information could only be given in the case where the tenant was connected to the landlord e.g. a relative, which would not apply in the majority of cases. The letter does not state that it is fine if they do not have all the information and that “not known” can be given in these cases. This is likely to generate extra calls to HMRC at what is presumably one of their busiest times of year.
There is also reference made to errors and penalties. HMRC have confirmed separately that they will not look to charge a penalty if mistakes have been made in the completion of the form and they would only be relevant where the tenant has chosen not to deduct tax at the right time or failed to do so.
Although there is no legal obligation to respond to the letter, HMRC have stated that responding will enable them to help the tenant if further action is required or to be able to tell them that no further action is required. Where HMRC have no response from either the tenant or the landlord, they will continue to contact the landlord.
