Leaving the UK as a Landlord? How to Keep HMRC and Your Lettings Profits Under Control

Union Jack graphic with the word “Goodbye,” symbolising UK landlords moving abroad.

Like many before me and many after me, leaving the UK is becoming a topic of discussion and a realistic action to leave the UK for those frustrated with the high tax, politics, crime and did I mention the rain?

Why It Matters

Thousands of UK landlords move abroad every year, whether to retire in Spain, work remotely from Dubai, or manage investments internationally. Leaving the UK doesn’t mean leaving HMRC.

If you rent out property here, your income remains taxable under the Non-Resident Landlord Scheme (NRLS)

Letting agents (or even your tenants) must deduct 20% basic-rate tax from your rent unless you apply for gross payment status. And even when you’ve gone non-resident, you’ll still need to file annual Self Assessment tax returns to declare your profits, including rental income, UK dividends, or capital gains.

Step 1 – Confirm Your Residence Status

HMRC uses the Statutory Residence Test (RDR3) to decide whether you’re a UK resident for tax. 183 days or more in the UK = resident

Full-time work abroad and fewer than 91 UK days = likely non-resident

If you’re leaving mid-tax year, file a Form P85

(if not in Self Assessment) or the SA109 Residence pages (if you are). This ensures HMRC recognises your new tax status and prevents overpayment.

Step 2 – What Income Stays Taxable

Leaving the UK doesn’t remove UK tax on:

Rental income from UK property (through the NRLS)
Dividends from your own UK company (still UK-source income)
Capital gains from selling UK land or buildings

If your properties are owned through a limited company, the company pays 25% Corporation Tax (HMRC reference). You’ll then pay dividend tax at 8.75%, 33.75%, or 39.35% when taking profits personally.

Example: The NRLS in Action

Let’s say you rent your London flat for £1,200/month (£14,400/year).
If you move abroad and don’t register under the NRLS, your letting agent must deduct 20% tax (£2,880) and send it to HMRC.

If you apply for gross payment status, you’ll receive the full £14,400 and declare your real profit through Self Assessment, allowing you to offset mortgage interest, insurance, and maintenance.

In many cases, landlords reclaim hundreds of pounds by simply registering with the NRLS and filing properly.

Step 3 – Selling Property While Non-Resident

Non-residents must report any UK property sale within 60 days using HMRC’s CGT on UK Property service.

Example:

You sell a rental property for £300,000, having originally paid £240,000, a £60,000 gain.

If you’re a higher-rate taxpayer, you’ll pay 24% CGT = £14,400.

However, if you return to the UK within five tax years, that gain could be taxed again under the temporary non-residence rule (TCGA 1992 s.10A). So, plan carefully before selling or returning.

Step 4 – What the Numbers Say

The Office for National Statistics (ONS) reports that 823,000 people left the UK in 2023, mainly for work, study, or retirement.

HMRC also processed thousands of P85 and SA109 submissions that year, many from landlords formalising their departure to avoid double taxation and lost refunds.

Step 5 – Making Tax Digital (MTD)

From April 2026, landlords earning over £50,000 annually from property must comply with Making Tax Digital for Income Tax.

Even non-resident landlords must:

– Keep digital rental records

– Submit quarterly updates to HMRC

– File one end-of-year declaration electronically

At Optimise Accountants, we’re already helping landlords abroad adopt MTD-ready cloud systems so they stay compliant without managing the admin themselves.

Step 6 – Key Action List

Register under the NRLS to avoid rent deductions
File P85 or SA109 to confirm non-residence
Track your UK days and travel for RDR3 proof
Report UK property sales within 60 days
Prepare now for MTD digital reporting from April 2026

Upcoming Live Webinar – 12 November 2025

Topic: Making Tax Digital (MTD) for Landlords & Property Investors 8:00 pm UK time Live on YouTube Hosted by Optimise Accountants

Register → https://zurl.co/fa5KK

Final Thoughts

Whether you’ve already left the UK or plan to move abroad soon, your buy-to-let tax obligations don’t stop at the border.

With HMRC ramping up cross-border data sharing and MTD automation, compliance is no longer optional; it’s strategic.

Plan early, structure smartly, and keep every pound you legally can.

For specialist advice on leaving the UK as a landlord or property investor: https://internationaltaxesadvice.com/tax-returns-refunds-calculator-when-leaving-the-uk/

By Simon Misiewicz FCCA ATT EA MBA, Director of Optimise Accountants
(Cross-border UK tax specialists for landlords and property investors).