Q. I am going to work overseas for the next couple of years and have decided to keep my property and rent it out whist I’m gone. Having never done this before I am hearing lots of things particularly in respect of paying tax on the rental income. Where do I stand on this, I’ve heard the agent has to deduct tax on my behalf?
A. Letting your property whist you’re working overseas is a great idea, that way you not only get your expenses covered whilst away you can also rest in peace knowing you are able to move back should you return to the UK at some point. My biggest advise is find a NAEA/ARLA (National Association of Estate Agents) (Association of Residential Lettings) Licenced agent, they are regulated and will be in a position to give you good solid advise and oversee the management of your property in a professional manor, this would include anything related to income tax and how this should be handled. Letting agents and also tenants (if there is not an agent involved) are held responsible by HMRC for making sure that overseas Landlords income tax at 20% is deducted at source from the rental income less allowable expenses, unless they have an approval number from HMRC. If you wish to pay your own taxes you can fill out an NRL1 form and apply to be part of the Non-Residents Landlord scheme, this form can be supplied by your agent who should already be registered with the scheme, or downloaded from the HMRC website once the form is completed and returned HMRC will issue you and your appointed agent with an approval number, this approval number is a notice to pay rental income with no tax deducted. The liability to pay income tax is then your responsibility and the agent can then pay across the full rental income less their fees and any maintenance invoices payable.