Paying rent to an overseas landlord: How it works and how to pay

Disclaimer: The information in this article is for reference purposes only. All information on this page should not be considered financial or tax advice. You are also solely responsible for calculating and paying your tax liabilities depending on the applicable law. All tax saving strategies or decisions should be made after thorough research and consultation with a qualified financial advisor.

Having an overseas landlord may seem like a challenge to you as a tenant. Communication may be delayed. It can be difficult to get your landlord on property, especially for maintenance.

Most of all, paying the rent can come with hidden costs and complications, especially as you have additional responsibilities as a tenant in this situation. High fees and poor exchange rates are commonly found with traditional banks. The process doesn’t have to be difficult and costly though.

Wise provides a needed alternative, with mid-market exchange rates and low, transparent fees* for sending money overseas. Wise also accepts direct debit payments for some currencies, so that you can set up a convenient, regular payment.

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Understanding your responsibilities when paying rent to an overseas landlord in the UK

A critical responsibility of anyone’s role as a tenant is paying rent to the right account on time. Sending money to an overseas landlord may bring additional difficulties. Complying with HMRC is vital and understanding what the UK government requires of tenants is key.

What is the Non-Resident Landlord Scheme (NRLS)?

The Non-Resident Landlord Scheme¹ was designed to collect tax on a UK property whose landlord resides overseas. The basic tax rate is 20% minus reasonable expenses and is usually applied by the landlord’s letting agent.

If the landlord is not registered with a letting agent then it is the tenant’s responsibility to deduct tax from the landlord’s rental income in the UK and pay HMRC. Payment is traditionally calculated for each quarter and is due around 30 days before the end of a quarter.

Who is classified as an overseas landlord by HMRC?

According to HMRC, an overseas landlord is someone who gains rental income from a UK property despite the fact that their ‘usual place of abode,’ is outside of the UK. These may be individuals, companies, trustees or partnerships.

The landlord in question typically has to be absent from the UK for 6 months or more, for the UK to no longer be the ‘usual place of abode.’ These individuals are classed as Non-Residents, a tax status that requires them to continue paying tax earned through UK interests.

The “Strict Liability” rule

The “Strict Liability” rule means that you are held personally accountable for criminal offences regardless of intent and fault. That means, in the case of the Non-Resident Landlord Scheme which operates under this rule, if you forget to pay this tax or do not understand your responsibilities, HMRC can hold you responsible regardless.

Understanding the NRLS properly and paying what is owed to HMRC is so important as a tenant with an overseas landlord.

Your obligation as a UK tenant paying rent to a non-resident landlord

Under the NRLS you have a strict responsibility to pay tax on your rent, when you have an overseas landlord. There are some conditions to look out for though, which may impact what HMRC asks of you. Remember, you can use Wise to simplify the rent payment process.

The £100 per week threshold

There is a threshold applied to the NRLS, which means that if you are paying less than £100 per week in rent to an overseas landlord, you are not liable to pay the 20% tax unless informed by HMRC otherwise.

It is critical to check that you are exempt and that as soon as the £100 threshold has been reached, that you pay the correct amount. Reach out to HMRC if you are unsure of whether you should be paying. If there is a letting agent involved, you usually do not have to worry.

The “UK Account” misconception

There is a common misconception that if you are paying rent to an overseas landlord into a UK account, that you will be exempt from paying this tax.

A landlord may still be classed as overseas, even if they also maintain a UK bank account. Confirming the landlord’s ‘usual place of abode’ is the best way to understand whether the Non-Resident Landlord Scheme applies.

Step-by-step: How to calculate, withhold and report rental tax

Now that you’ve determined what NRLS is and whether you are liable to pay it, it’s time to get into the process of calculating the tax and forwarding it to HMRC.

Calculating the 20% withholding tax: A simple formula for tenants

If your landlord is not approved for Gross Payment Status, you must calculate the tax on the “Property Income” for the period. The formula is as follows.

Tax = (Total Rent - Allowable Expenses) x 0.20

The total rent, in this case, is the full amount due for the quarter. The allowable expenses are those costs that the tenant paid on the landlord’s behalf.

That may include maintenance personnel such as an electrician or a plumber, paid by the tenant and deducted from the final rent. The 0.20 represents the 20% current basic rate of income tax.

Deducting any allowed expenses

Deducting any allowed expenses before paying tax to HMRC is an important part of the process that ensures you have not been unfairly paying for necessary costs out of your own pocket. The deductible expenses are those that can be reasonably satisfied. They are allowable if they are incurred wholly for the purposes of the rental business and not of a capital nature.

In real terms, allowable expenses for a rental business, which you may have had to pay out of your own pocket, can include: gardening fees, cleaning fees, cost of rent collection, maintenance charges, repairs and provision of services.

Reporting to HMRC

Once the tax has been calculated, inform HMRC by filling in a NRLQ form, which outlines the amount of tax due for each quarter. Send this 30 days before the end of the quarter. You must also complete a NRLY form every year, which covers the annual return, even if you haven’t deducted any tax.

The NRL6 Certificate

You should also fill out an NRL6 certificate which confirms to a landlord that you have paid the necessary tax. Keep a copy in case it is needed for HMRC.

Landlord approval: Receiving gross rent payments

Now that the basics are covered, it’s time to look at how gross rent payments may change things.

What is gross payment status and why do overseas landlords apply?

Gross payment status² is the principle that a landlord may receive their full rent, without being taxed at the source. Overseas landlords may apply for this to avoid overpaying on their tax, while having control over the process. That means tenants will not be responsible for paying the 20% tax.

Checking if your overseas landlord is approved by HMRC

It is best to always clarify whether your landlord has been approved by HMRC for gross payment status before deciding to not cover the tax. You may contact HMRC directly to receive an approval notice.

Letting Agent vs. the Tenant in the NRLS

If you are a tenant, operating with a landlord who is not associated with a letting agent or is not considered a corporate entity like a letting agent, then you are responsible for engaging in the NRLS process.

However, if a letting agent is present, you are responsible for confirming that the tax is paid but will not have to engage in the process yourself. It is far more straight-forward.

What if your landlord is a non-resident company or trust?

You may be dealing with more than just an individual landlord. Here’s what to do if they are represented as a non-resident company or trust.

Key differences for a non-resident company landlord

Non-resident companies are required to pay Corporation Tax. However, unless informed otherwise, tenants are still expected to pay the Income Tax on behalf of the non-resident company landlord, under NRLS rules.

Specific rules for overseas trusts

If your landlord is represented by an overseas trust, the tenant is still responsible for paying Income Tax under NRLS rules unless stated otherwise. A trust may appeal to HMRC to receive UK income without deducted tax.

For Digital Nomads: UK citizens renting property abroad

There are some major benefits to having an overseas landlord despite the complications, especially in the age of digital nomads.

Tax residency vs. Physical presence

Your tax residency may be different from your physical presence. Where you are registered to pay tax may not be where you currently live and work. You may be registered to pay tax in two locations.

If you’re a tax resident, which often means you have been in a location for 183 days or more, you will be taxed on your global income.³

If you’re a non-resident in a country you are currently staying in, only the income earned in that place will be taxed.

Navigating double taxation

If your current location is different from your tax residency then you might be taxed twice on your income. If you are a UK citizen renting abroad, you may be liable to pay tax both locally and in the UK. Multiple countries have agreements in place to avoid this. It is important to look at those choices to determine whether there is an option to grant primary taxing rights to a single country.

Transfer rent to your overseas landlord with low, transparent fees

If you are paying rent to an overseas landlord, you may have additional responsibilities to take care of. While communicating with HMRC is a big part of the process, paying rent can also become complicated.

Use a Wise account to keep conversion costs low* and take advantage of the mid-market exchange rate. Simplify your payment process with Wise by setting up Direct Debit (currently available in select currencies) to ensure your rent gets paid on time.

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FAQs: Paying rent to an overseas landlord

Is the UK Non-Resident Landlord Scheme mandatory for all rent payments?

The NRLS is mandatory only for properties owned by non-resident landlords who do not have gross payment status.

What are the penalties for a tenant who fails to deduct tax from rent?

Tenants will face an initial financial penalty of £300, with a maximum of £60 a day, if the failure continues. Incorrect data submissions can face penalties of up to £3000.⁴

Can the overseas landlord reclaim tax deducted by the tenant or agent?

Any excess tax paid by a tenant or letting agents may be reclaimed by overseas landlords.

Does the Non-Resident Landlord Scheme apply if the rent is paid into a UK bank account?

Yes, the scheme is concerned with the tax identification of the landlord as opposed to the location of their account.

Does the scheme apply to Crown Servants or military posted abroad?

Yes, Crown Servants and members of the military must still comply with the scheme.

Sources used for this article:

1. HMRC - what the non-resident landlord scheme NRLS is
2. HMRC - concerning gross rent under NRLS
3. HMRC - how to determine tax residency
4. HMRC - record keeping for the NRLS

Sources last checked: 11 February 2026