PIM4820 - The Non-resident Landlords Scheme - letting agents

Definition

A letting agent is generally a person who:

  • has a 'usual place of abode' in the UK, and
  • acts for a non-resident landlord (NRL) in the running of their UK property business, and
  • has the power to receive income of the non-resident landlord's property business, or has control over the direction of that income.

A ‘letting agent’ for the purposes of the scheme does not need to be an estate agent or other property management business. A ‘letting agent’ could be a professional representative like an accountant or solicitor, or a private individual like a relative or friend; the letting agent is someone who acts for the non-resident landlord as above.

HMRC’s online NRLS guidance explains what to do if there are multiple agents (a chain) in the document: “Which agents should operate the Non-resident Landlords Scheme”.

The regulations provide that a particular person must act as a letting agent, as outlined above. They also give HMRC the power to require a particular person to act as the letting agent, or to authorise a person’s request to act as letting agent.

Letting agents’ obligations

Letting agents who have to operate the Non-resident Landlords Scheme must:

  • register with HMRC
  • account quarterly for any tax to HMRC
  • complete an annual information return, where they are required to account for tax, provide their non-resident landlords with a certificate of tax liability each year, and
  • keep sufficient records to show that they have complied with the requirements of the Scheme.

Letting agents have the right to deduct any tax they have to pay under the Scheme from their rent, or from any other money owing to the non-resident landlord. They also have the right to recover from the landlord any tax they have to pay under the Scheme where they did not deduct it from their rent or other money owing.

Before calculating the tax due the letting agent may deduct certain expenses, such as letting agent fees, cost of advertising for new tenants, gardening, etc. (See under the heading “Deductible expenses” in the online NRLS guidance, in the document: “What the non-resident landlord scheme is”).  

Offshore transparent funds

In the case of an offshore transparent fund, each investor in the fund entitled to receive UK property income is a landlord in respect of their share of income and may be a ‘non-resident landlord’ if their usual place of abode is outside the UK.

HMRC may give notice to the operator or administrator of such a fund, or a similar person, that they are to act as the non-resident landlord’s representative in respect of income payable to investors. In practice this can ensure that the right amount of tax is withheld under the scheme, including the appropriate deduction of expenses.