14:24 PM, 23rd November 2020, About 6 months ago 2
Hi everyone. I’ve been reading some conflicting advice about people who have lodgers and go away for a few months (fixed-term stay somewhere say for a summer job, less than a year, definitely not “moved out”, all belongings still in main home and room kept free).
Some people say it’s fine and that the six-month rule is only a guideline and not fixed in law – including HMRC’s own website – and some say it’s super strict.
Any legal people here to advise?
I rang HMRC and the council property department to ask them, and they seemed to think it was fine, but I don’t have that in writing.
A landlord who lives abroad for more than 6 months of the year must pay tax on any income they get from renting out property in the UK. If the landlord is a company or trustee, the rules about their usual place of abode apply.
The tax is collected using the Non-resident Landlord Scheme.
Who needs to use the scheme
You will need to deduct tax from rent if you are:
If you’re a letting agent you must operate the Non-resident Landlord Scheme no matter how much rent you collect, unless HMRC has told you in writing that the landlord can receive the rent with no tax deducted.
If the landlord is a joint owner, tax is paid on their own share of rental income.
You’re considered a letting agent under the scheme if you:
A letting agent can be an estate agent, solicitor, accountant or friend of the landlord. You’re not a letting agent if you only give a landlord legal advice or services.
Rental income can include money received for a wide variety of things such as:
What you need to do if you’re a tenant
You need to register with HMRC for the Non-resident Landlord Scheme and deduct tax from your rent.
You will need to provide your:
You also need to register with HMRC if you pay a UK representative of your landlord, such as a friend or family member, who isn’t a letting agent.
You don’t need to deduct the tax if HMRC has told you in writing that the landlord can receive the rent with no tax deducted, but you must still register with HMRC and complete an annual report.
What you need to do if you’re a letting agent
You must operate the Non-resident Landlord Scheme regardless of how much rent you collect unless HMRC has told you that the landlord can receive the rent with no tax deducted. You may still need to register and complete an annual report.
You need to complete form NRL4i to register for the scheme
If you’re a tenant-finder you don’t have to pay tax under the Non-resident Landlord Scheme if you collect your own fee for finding a tenant from rent payments and:
Janet finds a tenant for a property rented at £500 per month. She collects 2 months rent to get her fee. The tenant then pays the rent direct to the landlord. After Janet has deducted her fee and expenses, the tax due is £60 so she does not have to operate the Non-resident Landlord Scheme.
John finds a tenant for a property rented at £2,000 a year. John collects 6 months rent from which he recovers his fee and pays insurance and repairs. The tax due on the remainder is only £20, but because John collects more than 3 months rent he must operate the Non-resident Landlord Scheme.
Working out the tax you need to pay
To work out the tax you need to pay you must add up the total rent in the 3 months, include any uncleared cheques and money you paid to someone else at the landlord’s request.
Deduct any deductible expenses you paid in the quarter to give the net rent. Multiply the net rent by the basic rate of Income Tax.
HMRC may check that you have paid the right amount and interest may be charged on late payments.
Julie is a tenant who paid £1,500 rent from 30 June to 30 September. This was made up as follows:
Because the plumbing repairs are a deductible expense they are not included in the calculation of the taxable amount.
The tax is paid on £1,300 at the basic rate of 20% – a payment of £260 is due to HMRC.
Julie has the right to recover this money from rent payments or other money owed to the landlord.
How to make a payment
You must send payment within 30 days of the end of each tax quarter – 30 June, 30 September, 31 December and 31 March.
When to send your reports
You must send a report each year by 5 July to HMRC and the landlord using form NRLY.
You must also provide your landlord with a certificate NRL6 each year by 5 July.
What you need to keep
You need to keep records for 4 years of:
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