PIM4850 - The Non-resident Landlords Scheme - usual place of abode

The Non-resident Landlords Scheme applies to people who pay UK rent to landlords whose usual place of abode is outside the UK. Although the title of the scheme refers to 'non-resident' landlords, it is usual place of abode and not residence for tax purposes that determines whether a landlord is within the Scheme or not. ‘Usual place of abode’ is a test which can be applied at any time, enabling letting agents and tenants to operate the NRLS, whereas the statutory residence test is applied in retrospect looking at the tax year as a whole.

Individuals

Individuals have a usual place of abode outside the UK if they usually live outside the UK. But individuals are not regarded as having a usual place of abode outside the UK if they are living outside the UK only temporarily (say, for six months or less).

Individuals can have a usual place of abode outside the UK even if in a particular year they are resident in the UK for the purposes of the statutory residence test (SRT). For example, the individual may count as resident in the UK under the SRT as a result of a short-term residence in the UK though their usual place of abode is outside the UK. A practical solution to this difference is for the landlord to apply for authorisation to receive rent gross (see PIM4860) so that their UK tax affairs are dealt with on their self assessment tax return.

Partners

The usual place of abode of partners of a partnership is considered individually under the normal tests, depending on whether they are an individual, a company, etc.

Companies

Companies that have their main office or other place of business outside the UK, and companies incorporated outside the UK, normally have a usual place of abode outside the UK. However, companies regarded as resident in the UK for tax purposes do not have a usual place of abode outside the UK for the purposes of the Scheme, even though they may be incorporated outside the UK.

The UK branch of a non-resident company, where that branch is within the charge to Corporation Tax, has a usual place of abode within the UK for the purposes of the Scheme.

Trustees

The trustees of a trust have a usual place of abode outside the UK, as a group, if each trustee has a usual place of abode outside the UK (following the rules for individuals and companies, as appropriate). If one or more of the trustees does not have a usual place of abode outside the UK, the trustees (as a group) are not a non-resident landlord for the purposes of the Scheme. UK property income arising to the trustees as a group remains subject to tax in the UK, so the trustees will need to register for self-assessment. See the Trusts, Settlements and Estates Manual from page TSEM10020.

Jointly owned property

For jointly owned property each individual is treated as a separate landlord. Joint owners may have different places of abode: the application of the NRLS must be considered individually for each joint owner.

Each investor in a transparent fund who is 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. Investors’ usual place of abode will need to be considered individually; it is possible for a fund to have some investors who are non-resident landlords and some who are not (because their usual place of abode is the UK).

Who decides the usual place of abode?

It is for the letting agent or tenant to determine the 'usual place of abode' of the landlord. If this is in doubt, the letting agent or tenant should get more information from the landlord to satisfy themselves on the point. In particular, PO Box numbers and 'care-of' addresses alone should not be relied on as evidence that the scheme does not apply. Where letting agents or tenants have no reason to believe that a landlord has a usual place of abode outside the UK, they are not required to make any special enquiry and they therefore would not have to operate the scheme.