When you decide to move abroad, it’s important to understand how this affects your tax status in the UK. Even if you no longer reside in the UK, you may still have tax obligations if you earn income from UK-based sources such as rental property.
British expats are required to notify HM Revenue & Customs (HMRC) when they leave the UK if they are relocating permanently or planning to work overseas for a full UK tax year, which runs from 6 April to 5 April. How you inform HMRC depends on whether you currently file a Self Assessment tax return.
If you don’t usually file a Self Assessment return, you’ll need to submit Form P85 to HMRC. For those who do already file Self Assessment, you must complete Form SA109 alongside your annual return to declare your new residency status. This form is not supported by HMRC’s online platform, so you must either post your return, use compatible tax software, or work with a UK-based accountant.
Additionally, should you return to the UK in the future, you are also obligated to inform HMRC about your return to residency.
Tax Obligations on Overseas Income
Once you become a non-resident for tax purposes, the good news is that you’re generally not liable to pay UK tax on any income or gains you receive from outside the UK. However, income from UK sources such as rental income is still subject to UK tax laws, even for expats living abroad.
Voluntary National Insurance Contributions
While you’re living abroad, you may choose to make voluntary National Insurance contributions. This decision is particularly relevant if you plan to return to the UK in the future or want to ensure that you are eligible to receive the UK State Pension.
Making these contributions can safeguard your entitlement to certain UK benefits, including the State Pension. However, these payments are not refundable should you choose never to return to the UK. Depending on the country you’re moving to, your UK NICs may count toward social security benefits there, provided that country has a reciprocal agreement with the UK.
UK Tax on Rental Income for Expats
Even as a non-resident, any rental income from UK property is taxable under UK law. The exact tax due will depend on the total rental income you receive, any allowable expenses, and your overall taxable income.
There are two primary ways you can manage your tax payments on rental income:
- Under the Self Assessment system, you collect all the rental income and are responsible for paying the correct tax to HMRC.
- Through the Non-Resident Landlord (NRL) Scheme, your letting agent or tenant deducts tax from your rent before paying you. This is mandatory if the rent is more than £100 per week and the landlord hasn’t received approval to receive gross payments.
If you wish to handle your tax payments yourself and receive rent without tax deducted, you’ll need to apply for this using Form NRL1i. Approval depends on your history of timely tax payments and returns. HMRC may reject your application if you have a record of late submissions or missed payments.
It’s also worth noting that no National Insurance contributions are due on rental income, and as a private landlord, you’re not required to register for VAT.
Registering for Self Assessment
As a landlord, you may be required to register for Self Assessment even if you don’t reside in the UK. The property allowance allows you to receive up to £1,000 in rental income tax-free. If you choose to claim this allowance, you cannot also claim expenses.
If your rental income falls between £1,000 and £2,500, you must contact HMRC for specific guidance on how to report it. If your rental income exceeds £2,500 after expenses or £10,000 before expenses, you are required to register for Self Assessment and submit an annual tax return.
You must register by 5 October following the end of the tax year during which you earned rental income. Missing this deadline could result in penalties.
Filing Your Tax Return from Overseas
As a non-resident, you cannot use HMRC’s standard online platform to file your Self Assessment tax return. You have three main options:
- Submit a paper return to HMRC. This must be received by 31 October after the tax year ends. Paper returns have an earlier deadline than online submissions and are generally more time-consuming.
- Use commercial tax software that supports non-resident filings. This software typically provides clear prompts and reduces the risk of mistakes.
- Hire a UK-based accountant who is experienced in working with non-resident landlords. While this is the most expensive option, it can also be the most efficient and reliable.
Regardless of the method you choose, your completed tax return must be filed by 31 January. Missing this deadline triggers an automatic penalty of £100, which increases if the delay continues.
Required Tax Forms
When you file your Self Assessment tax return as a non-resident landlord, you will need to include the following forms:
- SA100 – The main Self Assessment tax return
- SA105 – To report income and expenses from UK property
- SA109 – To confirm your non-resident status and detail your residency information
These forms provide HMRC with all the necessary information to assess your tax liability correctly. Once submitted, HMRC will calculate the tax you owe based on your total income and allowable expenses.
Keeping Accurate Financial Records
As a landlord, whether resident or non-resident, it’s essential to maintain accurate and complete records related to your rental activities. This includes:
- Rental dates and amounts received
- Bank statements showing rent payments
- Rent books and tenancy agreements
- Receipts and invoices for expenses claimed
You must retain these records for at least 22 months after the end of the tax year to which they relate. Failing to keep adequate documentation or submitting inaccurate returns may result in fines or other penalties from HMRC.
How Tax Is Calculated on Rental Income
The tax you owe is calculated by deducting allowable expenses from your total rental income. These expenses must be directly related to the management and upkeep of the property and must not include capital improvements or personal expenses.
If you own multiple rental properties in the UK, the total profits and losses from all properties are aggregated to determine your net taxable rental income.
Once HMRC has your total taxable income, including any other UK income you receive, it applies the relevant tax rates. The bands and rates for the 2024/25 tax year are as follows:
- Up to £12,570: 0% (Personal Allowance)
- £12,571 to £50,270: 20% (Basic Rate)
- £50,271 to £125,140: 40% (Higher Rate)
- Over £125,140: 45% (Additional Rate)
Your Personal Allowance decreases by £1 for every £2 of net income above £100,000 and is completely removed once income exceeds £125,140.
It’s also important to consider ownership structures. If you jointly own a rental property, your share of the income and expenses determines your individual tax liability. For married couples or civil partners who live together, income is typically split equally unless an alternative ownership ratio can be proven to HMRC.
Understanding the Non-Resident Landlord Scheme
Under the Non-Resident Landlord Scheme, letting agents or tenants are required to deduct basic rate tax from rental payments before passing the balance to you. This ensures that HMRC receives tax payments from landlords who live abroad and might otherwise fall outside the standard UK tax system.
If you do not apply for approval to receive gross rental income, this deduction is mandatory. Once tax has been deducted and paid to HMRC, you will receive a certificate at the end of the tax year detailing the amount withheld. This documentation is crucial when completing your Self Assessment return.
To apply for gross rental income status, complete Form NRL1i and submit it to HMRC. If approved, HMRC will instruct your letting agent or tenant to stop deducting tax, and you’ll be responsible for reporting and paying the tax due through your own return.
Avoiding Penalties and Common Errors
Many expat landlords fall into the trap of overlooking their UK tax obligations, which can result in penalties. Common issues include:
- Failing to inform HMRC about a change in residency
- Missing registration deadlines
- Filing returns late
- Claiming non-allowable expenses
By staying compliant, keeping clear records, and meeting deadlines, you can avoid unnecessary fines and ensure your UK rental income is managed efficiently.
Understanding the Non-Resident Landlord (NRL) Scheme
If you’re a landlord living overseas and receiving rental income from UK property, the Non-Resident Landlord Scheme is central to your tax obligations. This scheme was designed to ensure HMRC collects the correct amount of tax from landlords who reside outside the UK.
Letting agents and tenants may be required to deduct basic rate tax from the rent they pay you and pass this to HMRC. However, you have the option to apply for approval to receive your rent gross—without any tax deductions—by submitting the appropriate form. If approved, you remain responsible for calculating and paying the tax due via Self Assessment.
This route offers better control over your cash flow and tax planning, particularly if you claim allowable expenses or have a lower taxable income. To qualify for gross rent receipts, you must demonstrate a history of timely and accurate tax filings.
Applying for the NRL Scheme
To apply for approval under the Non-Resident Landlord Scheme, you’ll need to complete form NRL1i. Once processed, HMRC will notify your letting agent or tenant to stop deducting tax at source. If you are denied due to past tax non-compliance, your only option is to accept tax being withheld at the source.
It’s important to note that even if rent is paid gross, it remains taxable. You’ll still be required to declare the income and any deductible expenses through Self Assessment.
Self Assessment for Landlords Abroad
Self Assessment is HMRC’s system for collecting Income Tax from individuals who don’t have tax automatically deducted from wages or pensions. As a non-resident landlord, you are generally required to report your UK rental income through this process.
Self Assessment tax returns are made up of several components. The primary document is the SA100, where you report your overall income. Supplementary pages like the SA105 and SA109 allow you to disclose property income and your non-residency status.
Failure to submit accurate and timely returns can result in penalties, so it’s crucial to understand how the process works and adhere to all deadlines.
Registering for Self Assessment
You must register for Self Assessment by 5 October following the end of the UK tax year in which you first receive taxable rental income. For example, if you earned income from your property during the tax year ending 5 April 2025, your registration deadline is 5 October 2025.
You can register online using HMRC’s services or submit a paper application. Upon registration, HMRC will issue you a Unique Taxpayer Reference (UTR), which you’ll need to file your returns.
Filing Your Self Assessment Tax Return
Once registered, your return must be filed by 31 January following the end of the relevant tax year if filing online. If you choose to submit a paper return, the deadline is earlier—31 October. Late filings result in an automatic £100 penalty, increasing the longer you delay.
As an expat, you can’t use HMRC’s online portal directly due to residency restrictions. Instead, your options are:
- Submit a paper return by post
- Use third-party commercial tax software approved by HMRC
- Hire a UK-based accountant to handle your return on your behalf
Each approach has its pros and cons in terms of cost, convenience, and likelihood of errors.
Required Self Assessment Forms
Your Self Assessment return as a non-resident landlord should include the following forms:
- SA100: Main Self Assessment tax return
- SA105: Details of income and expenses from UK property
- SA109: Declaration of your non-resident status
These forms provide HMRC with the information required to assess your liability and determine how much tax you owe. Always ensure the information you submit is complete and accurate.
Allowable Expenses: Reducing Your Tax Bill
One of the benefits of managing your tax affairs via Self Assessment is the opportunity to deduct allowable expenses. These are costs you incur wholly and exclusively for the purpose of renting out your property.
Allowable expenses can include:
- Property maintenance and repairs (excluding improvements)
- Utility bills if paid by the landlord
- Letting agent and property management fees
- Advertising costs for finding tenants
- Cleaning and gardening services
- Council tax and service charges if not paid by the tenant
- Landlord insurance
- Accountancy and bookkeeping fees
You may also claim Replacement Domestic Items relief for like-for-like replacements of items such as sofas, beds, or white goods.
Mortgage Interest and Finance Costs
Until recently, landlords could deduct the full cost of mortgage interest from their rental income. However, a phased change that began in 2017 means this is no longer the case.
Now, you receive a 20 percent tax credit on finance costs instead of a deduction. This change mainly affects higher-rate taxpayers, as they can no longer claim mortgage interest at their marginal tax rate.
Keep in mind, capital repayments on your mortgage are never allowable as an expense. You should also check with your lender before renting out your property, as some mortgages require prior consent for letting.
Keeping Tax Records
Good record keeping is vital for accurate tax returns and potential HMRC inspections. You must retain detailed and legible records of:
- Rental agreements and dates
- Rent received
- Expenses paid, with supporting invoices or receipts
- Correspondence with tenants and letting agents
- Bank statements and financial records
You should keep these records for at least 22 months after the end of the relevant tax year. Poor or missing documentation can lead to penalties and challenges from HMRC.
Calculating Your Tax Liability
Your taxable profit from UK property is calculated as your rental income minus allowable expenses. If you own more than one rental property in the UK, profits and losses across properties are combined into a single total.
Once total profits are established, HMRC applies your tax-free Personal Allowance (if eligible) and calculates your tax due according to your total income level.
2024/25 UK Income Tax Bands (excluding Scotland):
- Up to £12,570: 0 percent (Personal Allowance)
- £12,571 to £50,270: 20 percent (Basic Rate)
- £50,271 to £125,140: 40 percent (Higher Rate)
- Over £125,140: 45 percent (Additional Rate)
If your total income exceeds £100,000, your Personal Allowance is reduced by £1 for every £2 above the threshold, disappearing entirely at £125,140.
Joint Ownership of Rental Property
If a rental property is jointly owned, each owner is taxed on their share of the net income. By default, married couples and civil partners are treated as owning property 50/50, unless they can demonstrate a different ownership ratio with a valid declaration to HMRC.
Adjusting ownership proportions for tax planning purposes can be beneficial, particularly if one partner has a lower marginal tax rate.
Capital Improvements vs Repairs
It’s crucial to distinguish between property repairs and capital improvements. Repairs maintain the property’s existing condition and are typically deductible expenses. In contrast, improvements enhance the value of the property and are considered capital in nature.
Examples of capital improvements include:
- Adding an extension
- Installing a new kitchen with superior fittings
- Converting a loft or basement
These costs are not deductible against rental income but can reduce your Capital Gains Tax liability if you sell the property later. Keep detailed records of all capital expenses for future reference.
Understanding Tax Reliefs and Allowances
Aside from the property allowance, there are other tax reliefs that may reduce your liability. You may be entitled to:
- Marriage Allowance, if your income is below the Personal Allowance and your spouse is a basic rate taxpayer
- Blind Person’s Allowance
- Savings and dividend allowances if you have other income
These allowances are applied after rental profits and expenses are calculated and can further reduce your tax liability. Check your eligibility before filing.
Dealing With Multiple Properties
If you own more than one UK rental property, HMRC views your lettings as a single business. This allows you to offset expenses and losses across properties.
However, if your properties are let out in significantly different ways (e.g., furnished holiday lets vs long-term lets), they may be treated as separate businesses for tax purposes. You’ll need to report them accordingly in your Self Assessment return.
Staying on top of your income and expenses for each property ensures accurate tax reporting and helps you plan your finances more effectively.
Getting Help With Your Tax Return
Handling your tax obligations from abroad can be challenging, especially with complex rules or multiple properties. While many expats manage their tax returns independently, others choose to hire a UK-based accountant or use approved tax software to ensure accuracy.
If you decide to go it alone, make sure you:
- Understand UK property income rules
- Maintain clear and up-to-date financial records
- Monitor important deadlines and obligations
- Claim all eligible expenses and reliefs
Keeping Accurate Records as an Expat Landlord
Maintaining detailed and accurate financial records is crucial for all landlords, but especially for expats managing properties from abroad. Keeping the right documents will not only ensure you’re meeting legal obligations but also help you accurately complete your Self Assessment tax return and claim all eligible expenses.
Types of Records You Must Keep
Expats who let out UK properties must keep records such as:
- Rental income received, including payment dates and amounts
- Bank statements showing rental payments and related transactions
- Rent books and tenancy agreements
- Invoices and receipts for all expenses and repairs
- Property maintenance records
- Legal and accountancy costs
- Advertising costs for finding tenants
- Copies of correspondence with tenants or letting agents
Maintaining digital copies of physical documents is acceptable and often more practical for expats. Cloud-based storage solutions offer secure access and simplify document retrieval when filing tax returns.
Duration for Record Retention
All landlords must retain financial records for at least 22 months after the end of the relevant tax year. For example, if you earned rental income in the 2024/25 tax year, your records should be kept until at least 31 January 2027.
Longer retention may be beneficial if you’re under HMRC investigation or need to support future claims, such as for Capital Gains Tax on property sales.
Understanding Allowable Expenses and What You Can Claim
Claiming allowable expenses helps reduce your taxable rental income, potentially lowering your overall UK tax liability. Understanding which costs are deductible is essential for efficient tax planning.
What Qualifies as an Allowable Expense
Allowable expenses must be incurred wholly and exclusively for the purpose of renting out your property. Examples include:
- General repairs and maintenance, such as fixing a boiler or replacing roof tiles
- Redecorating between tenants to keep the property in rentable condition
- Property insurance, including buildings, contents, and liability policies
- Letting agent and property management fees
- Utility bills, council tax, and service charges paid by the landlord
- Ground rent and maintenance charges for leasehold properties
- Professional fees such as accountancy and legal costs related to the tenancy
- Phone calls, stationery, and postage related to letting activities
- Marketing expenses to advertise the property for rent
- Cleaning and gardening costs before or after tenancies
Partial Expenses for Shared Costs
If an expense is shared between rental and personal use, only the portion relating to the rental business is allowable. For example, if your phone is used for both personal and landlord communication, you can claim a fair percentage related to rental activities.
Detailed notes and calculations should be retained to support such apportionments.
What Is Not an Allowable Expense
Some common expenses are not allowable under Income Tax rules:
- Mortgage capital repayments are not deductible
- Costs for property improvements, such as adding an extension or converting a loft, are not allowable against rental income (though they may count against future Capital Gains Tax)
- Personal expenses or travel costs for leisure visits to the UK
Replacement Domestic Items Relief
Instead of claiming depreciation or capital allowances, landlords can use the Replacement Domestic Items Relief. This applies to replacing items in a furnished or part-furnished rental property.
You can claim for the cost of a like-for-like replacement of items such as:
- Sofas and armchairs
- Beds and mattresses
- Curtains and carpets
- White goods (e.g. washing machines, fridges)
- Crockery, cutlery, and cooking utensils
Only the cost of a similar item can be claimed. Upgrades to more expensive or higher-specification items cannot be claimed in full—only the value of the equivalent item.
Taxation of Jointly Owned UK Properties
When a UK property is jointly owned, rental income is divided according to ownership shares, which affects how much tax each party pays.
Spouses and Civil Partners
For married couples and civil partners living together, the default tax treatment splits rental income 50/50. However, if actual ownership is unequal, you can elect to be taxed on your respective beneficial interest by submitting Form 17 to HMRC, along with evidence (e.g. a declaration of trust).
This can be a valuable tax planning opportunity. For example, allocating more income to a lower-earning spouse can reduce the overall household tax burden.
Other Joint Owners
Where the property is owned with others who are not a spouse or civil partner, income is typically divided based on legal ownership unless another agreement exists. It’s important to document the income-sharing arrangement and ensure consistency in tax returns.
Understanding the Impact of Tax Bands on Rental Income
Rental income is added to any other taxable income you have during the tax year. HMRC calculates your tax liability based on the total and applies the appropriate Income Tax rates.
2024/25 Income Tax Bands (England, Wales, and Northern Ireland)
- Personal Allowance: Up to £12,570 – 0%
- Basic Rate: £12,571 to £50,270 – 20%
- Higher Rate: £50,271 to £125,140 – 40%
- Additional Rate: Over £125,140 – 45%
The Personal Allowance is reduced by £1 for every £2 of income above £100,000. If your income exceeds £125,140, the allowance is removed entirely.
Tax Example for an Expat Landlord
Suppose you have £15,000 in net rental profits and no other UK income:
- The first £12,570 is covered by the Personal Allowance
- The remaining £2,430 is taxed at 20%, resulting in a tax bill of £486
If your rental profits are £40,000 and you also have a £30,000 pension, your total taxable income is £70,000. After the Personal Allowance, £57,430 is taxable:
- £37,700 taxed at 20% = £7,540
- £19,730 taxed at 40% = £7,892
- Total tax: £15,432
Understanding how your income spans tax bands can help with planning decisions, such as splitting income or adjusting mortgage interest relief.
Tax Credits for Mortgage Interest and Finance Costs
Before 2017, landlords could deduct the full cost of mortgage interest and finance charges from rental income. However, under recent reforms, this deduction has been replaced by a basic rate tax credit.
Current Rules
You now receive a 20% tax credit on eligible finance costs, including:
- Mortgage interest
- Interest on loans to buy furnishings
- Mortgage arrangement fees
This means that regardless of your marginal tax rate, you only receive relief at the basic rate (20%).
For example, if you pay £4,000 in mortgage interest, you receive a tax credit of £800 to reduce your overall tax bill.
This change disproportionately affects higher and additional rate taxpayers, as they previously enjoyed 40% or 45% relief.
Capital Gains Tax for Expat Landlords
Selling a UK property as an expat can trigger Capital Gains Tax (CGT) if the property has increased in value. Even if you’re non-resident, CGT still applies on gains from UK residential property.
Reporting and Paying Capital Gains Tax
Since April 2020, all non-resident individuals must:
- Report the sale to HMRC within 60 days of completion
- Pay any CGT due within the same 60-day period
Failure to meet this deadline results in penalties and interest.
Calculating the Gain
To determine your gain:
- Subtract the purchase price, legal fees, and allowable costs from the sale proceeds
- Deduct any capital improvements made (but not routine repairs)
- Deduct your CGT Annual Exempt Amount (£3,000 for 2024/25)
The remaining gain is subject to CGT at:
- 18% for basic rate taxpayers
- 28% for higher and additional rate taxpayers
Capital gains from the sale of UK commercial property or land are also taxable for non-residents, but at different rates.
What Happens If You Return to the UK?
Returning to the UK after living abroad can change your tax residency status and impact how your rental income is taxed. Your worldwide income—including rental profits—will again be subject to UK taxation.
Key Actions to Take Upon Return
- Inform HMRC of your return and change in residency
- Review whether your tax reporting changes (e.g. stop filing SA109)
- Recalculate any taxes due on worldwide income from your new date of residency
If you continue letting out your UK property, the rental income remains taxable. However, other sources of overseas income will also be considered in your UK tax return.
Seeking Professional Support
Many expat landlords find the UK tax system complex, especially when juggling non-resident rules, Self Assessment deadlines, and overseas obligations. While it’s possible to handle your tax return independently using approved software, professional advice is often beneficial.
Tax advisors and accountants can help with:
- Optimising expense claims and ownership structure
- Handling communication with HMRC
- Preparing accurate and timely tax returns
- Advising on tax-efficient planning for repatriation
If you have multiple properties, high-value gains, or complex international income, seeking support can save time and reduce the risk of errors or penalties.
Conclusion
Navigating the UK tax system as an expat landlord can initially seem complex, but with a clear understanding of your obligations and entitlements, managing your UK rental income becomes much more straightforward. Whether you’re already living abroad or planning to relocate, ensuring tax compliance is not just a legal requirement, it also helps you avoid costly penalties and make informed financial decisions.
The key is to take a proactive approach. Inform HMRC about your residency status as soon as your circumstances change. Register for Self Assessment if your rental income exceeds the reporting thresholds and be meticulous about keeping your records. Understand how the Non-Resident Landlord Scheme works and decide whether it’s more beneficial to have tax deducted at source or manage it yourself through annual tax returns.
Claiming allowable expenses accurately can significantly reduce your tax bill, and knowing what’s deductible and what’s not ensures you don’t overpay or face HMRC scrutiny. Similarly, being aware of reliefs like Replacement Domestic Items and the changes in how mortgage interest is treated post-2020 can help you better manage profitability.
Additionally, remember that your total taxable income will determine how much tax you ultimately pay. If you jointly own property, your share of the rental income matters, and in some cases, declaring different ownership ratios can be tax-efficient if supported with the right documentation.
Living abroad adds layers to your tax situation, especially if you’re planning to retire overseas, invest further in UK property, or return to the UK in the future. Voluntary National Insurance contributions, potential Capital Gains Tax on UK property sales, and understanding reciprocal tax agreements with other countries should all be part of your long-term planning.
In summary, knowledge and organisation are your best tools. By understanding your responsibilities and using the right filing methods, tools, and professional support when necessary, you can stay compliant, minimise tax liability, and protect your income from UK property while enjoying life abroad.