Overseas landlord = Tentant responsible for paying Tax on rent

fakiee

After reading this http://www.hmrc.gov.uk/international/nr-landlords.htm

Its clear that tenants with Non-Residential Landlords (overseas landlords) are responsible for holding and paying to HMRC quarterly the basic tax rate from the rent. Something I was unaware of.

I have been living in a rental property for 6 months now. £1500 Monthly rent paid directly into landlords bank account each month, who I believe is a NRL.

I don't know the landlords address/residency however, his contact number has an Irish country code so from that its pretty clear he lives in Ireland. I'm at work so haven't checked the tenancy agreement for any official residency, if it exists in that document?

Based on what I currently know, I'm assuming that I should not be paying him the gross amount of £1500 but the net £1200 and £300 withheld each month by me to pay to HMRC quarterly as Tax?

The property was let via an estate agent, who provided all documentation and admin, including the total amount of monthly rent and how it should be paid directly into his bank account.

If the estate agent was aware that the landlord was NRL, why did they instruct me to pay 1500 a month directly to him? Shouldn't they have instructed me to pay the total amount with tax included?

Since I've been made aware of this I have no idea where I stand?

Gonzo1987

Check that the estate agent isn't dealing with this already, if the property is managed by them, they will be dealing with the tax issues.

benjus

Gonzo1987 wrote: »

Check that the estate agent isn't dealing with this already, if the property is managed by them, they will be dealing with the tax issues.

Not if the tenant is paying rent directly to the LL. It sounds like the agent was used on a "tenant find" basis only.

PasturesNew

There is an official letter, which somebody will link to, that you have to send to the landlord which basically says "I have to withhold this part of the rent unless you ....." and then start withholding it.

As the official letter exists, it'll be "official enough" for him to not think you're making it up etc.

Or, just link him to the hmrc site and tell him you're going to have to do that ... back-dated.... unless he can prove he's paying it (or whatever the HMRC criteria is).

fakiee

benjus wrote: »

Not if the tenant is paying rent directly to the LL. It sounds like the agent was used on a "tenant find" basis only.

That's correct. Estate agent was only used to find tenants, provide admin and handle contracts, fees and deposit. The landlord manages the property.

fakiee

PasturesNew wrote: »

There is an official letter, which somebody will link to, that you have to send to the landlord which basically says "I have to withhold this part of the rent unless you ....." and then start withholding it.

As the official letter exists, it'll be "official enough" for him to not think you're making it up etc.

Or, just link him to the hmrc site and tell him you're going to have to do that ... back-dated.... unless he can prove he's paying it (or whatever the HMRC criteria is).

Sounds simple and thanks for the advice, would be great to see that letter.

So if he is a NRL I have technically been overpaying him £300 every month straight into his account.

Will he just turn around and give me the £1800 for 6 months overpayments back?

princeofpounds

On top of the official letter, you may wish to suggest he finds a UK-based agent to receive his rent, as the liability then passes to them. They don't need to be an official lettings agency (as there is no such thing) - a relative would do.

I agree it is a stupid rule, as it is perfectly possible for a tenant not to know they have this liability, or to be able to find out, if the LL is less than clear about their residency arrangements.

I've never heard of HMRC actually chasing a tenant for this thankfully.

jjlandlord

Or, depending on how long you intend to stay, you can avoid rocking the boat and do nothing...

He may have been granted the right to receive the rent without deductions (though you should probably have received a letter from HMRC in that case).
If not, and you decide to operate the scheme, you may indeed deduct what you should already have paid to HMRC from your rent.

This assumes he is actually a non-resident landlord.

fakiee

jjlandlord wrote: »

Or, depending on how long you intend to stay, you can avoid rocking the boat and do nothing...

He may have been granted the right to receive the rent without deductions (though you should probably have received a letter from HMRC in that case).

If not, and you decide to operate the scheme, you may indeed deduct what you should already have paid to HMRC from your rent.

This assumes he is actually a non-resident landlord.

Thanks. So based on the assumption he is a NRL, I would have to pay HMRC the tax in arrears, and then offset that cost by deducting from future rent payments.

theEnd

Is this a real thing, or some nonsense some politicians came up with, then ignored.

I'd be amazed if they've ever chased a tenant for their LL's tax.

The concept is ridiculous.

Conrad

theEnd wrote: »

Is this a real thing, or some nonsense some politicians came up with, then ignored.

I'd be amazed if they've ever chased a tenant for their LL's tax.

The concept is ridiculous.

Things are really tightening up due to the public outcry over all the tax loopholes we hear about.


The LA in my own office had to comply recently with an HMRC dic-tat to provide details of all her LL's.


I know quite a lot of LL's avoid tax so this is a good measure, I hate people not pulling their weight for society.