Navigating UK tax on rental income for non-residents in 2025 can be challenging, especially with changing tax rates, National Insurance rules, and filing deadlines. Whether you’ve left the UK and are letting out your house or are an overseas property investor, understanding how UK tax on rental income for non-residents is calculated is essential to staying compliant and avoiding costly mistakes. In this complete guide, we explain everything you need to know about UK tax on rental income for non-residents — from how your taxes are calculated to practical tips for reducing your liability.
Who Should Read This?
This article is relevant for UK tax non-resident individuals who receive income from a UK rental property. As a UK tax non-resident, you are subject to UK tax on your UK sourced income which includes income earned from rental properties situated in the UK.
Details on letting a property while UK resident and letting a room in the house you live in can be found in our other articles.
If you are unsure about your UK tax residence status, please contact us via Contact Expat Tax Solutions UK to discuss your UK tax residence position.
What Counts as Rental Income for UK Tax Purposes
Understanding what qualifies as UK rental income is key to managing your UK tax on rental income as a non-resident effectively.
Rental income is any income earned through the letting of a property. This includes the rents paid by tenants and also any payments the tenants make to you for things such as the use of furniture, utilities, cleaning and ground rent etc. If the tenants contract and pay directly for their own utilities, this is not rental income and does not need to be considered further.
The tenants may have also paid an initial deposit when starting the tenancy. This is not rental income and is not subject to tax.
As a UK tax non-resident, you are only taxable in the UK on your UK sourced income and therefore do not have to declare or pay UK tax on your foreign income. Income from UK properties is UK sourced and remains UK taxable despite your non-residence status.
Allowable Expenses to Reduce UK Tax on Rental Income for Non-Residents
Claiming allowable expenses is one of the easiest ways to reduce UK tax on rental income for non-residents and maximise your profits.
UK income tax is due on the profits generated from the rental business. This is calculated as total gross income less any allowable expenses related to running the rental business.
When determining the amount of rental business expenses to deduct, you have two options:
- Deduct the actual costs of the rental business expenses incurred; or
- Deduct the Property Allowance of £1,000.
You are able to choose the most beneficial of the two options above for each tax year you let a property however you cannot deduct the Property Allowance and your actual expenses. Therefore, if your rental business expenses are less than £1,000, it will be beneficial to claim the Property Allowance as a deduction against your rental income.
Should you elect to deduct actual expenses, common examples of rental business expenses that are allowable for UK tax purposes are:
- General maintenance and repairs to the property
- Water rates, council tax, gas and electricity if paid by you
- Landlord, building and contents insurance
- Letting agent fees and management fees
- Rents (if you’re sub-letting), ground rents and service charges
- Vehicle mileage deductions for business related motoring costs
Mortgage Interest Tax Relief on Rental Income for Non-Residents
Interest payments for financing costs related to the property (mortgages etc.) are eligible for UK tax relief (provided you have not claimed the Property Allowance) however special rules apply.
Firstly, only the interest element of mortgage payments is eligible for tax relief. The portion of payments that reduce the capital balance of the loan are not deductible and should be removed when assessing the amount of mortgage payments eligible for relief.
Once the mortgage interest amount has been calculated, relief is not given by deducting this against your rental profit. Instead, the mortgage interest amount is multiplied by 20% and deducted from the UK tax due on your rental income. For Basic Rate (20%) taxpayers, there is no difference to the tax outcome however for Higher Rate (40%) or Additional Rate (45%) taxpayers, tax relief on mortgage interest is essentially restricted to 20% rather than your marginal tax rate of 40% or 45%.
The mortgage interest tax reducer cannot generate a tax refund and any unused amounts are carried forward to future years.
How Jointly Owned Properties Affect UK Tax on Rental Income for Non-Residents
When a property is jointly owned, the UK tax on rental income for non-residents is calculated on each owner’s share of the property.
Where the property is jointly owned by you and your spouse, the income and expenses are split 50/50 irrespective of the legal ownership split. If you have a unequal legal ownership split, you can elect to be taxed based on that split however you must declare this to HMRC via Form 17.
Where the property is jointly owned by you and someone other than your spouse, the income and expenses are split based on the legal ownership of the property.
Additional Reporting Requirements on UK Rental Income for Non-Residents
As a UK tax non-resident, your UK rental income should be subject to a 20% tax withholding administered by your lettings agent or by the tenant if you do not have an agent. To be exempt from the withholding, you should apply for the Non-Resident Landlord Scheme by submitting Form NRL1 notifying HMRC of your rental income and confirming that you will submit a UK self-assessment tax return.
How UK Tax on Rental Income for Non-Residents Is Calculated In 2025
The UK tax on rental income for non-residents depends on your total taxable income and applicable tax bands. The UK tax on rental income is calculated using the ‘non-savings’ rates which are the same rates as those applied to employment income. The 2025/26 rates are:
| Band | Taxable income | Tax rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
The above thresholds apply to your total taxable income and therefore, if you also have other UK sources of taxable income (self-employment income, bank interest, dividends etc.), your rental income is taxed at the highest rate that the income falls into.
As mentioned, UK non-residents are only subject to UK tax on their UK sourced income and therefore non-UK sources of income do not need to be considered when determining your total UK taxable income and your marginal tax rate.
As a non-resident, you may not be entitled to the Personal Allowance and your entitlement is dependent on your nationality and which country you are tax resident in. However British nationals are eligible for the personal allowance and therefore, if your UK rental income is your only source of UK income and it is below the Personal Allowance of £12,570, you will have to declare this to HMRC however you should not be required to pay any UK tax.
*If your UK taxable income exceeds £100,000, you will start to lose entitlement to the personal allowance.
Do I Pay National Insurance on Rental Income in 2025?
No. Rental income is not currently subject to National Insurance.
Student Loan Repayments on Rental Income for UK Non-Residents
Student Loan repayments are calculated based on your UK taxable income and plan type. UK taxable income in excess of the repayment threshold for your plan is subject to Student Loan repayments at the rate specified in your plan (9% for an Undergraduate Degree or 6% for Postgraduate Student Loans).
Rental income is classed as ‘unearned income’ and is only considered for Student Loan repayments if your total ‘unearned income’ for the year exceeds £2,000.
Therefore, if your rental profit exceeds £2,000 and your total taxable income exceeds the repayment threshold, your rental profit will be subject to Student Loan repayments via your self-assessment tax return.
Specific rules and notification obligations exist for individuals living outside of the UK and further information on this topic can be found at HMRC’s guidance here.
VAT Rules for UK Tax on Rental Income for Non-Residents
Rental income is not subject to VAT and you therefore do not need to register for VAT.
Record Keeping For UK Tax on Rental Income for Non-Residents
You must keep records of your rental income and expenses for UK tax purposes. You do not need to submit the records to HMRC however they must be retained to calculate the UK tax on your rental income. In the event of a HMRC enquiry, HMRC will request copies of these records to validate your rental income and justify any UK tax fee deductions that have been claimed.
You must keep your records for 5 years after 31 January following the end of the tax year. I.e. for the 2025/26 UK tax year, records must be kept until 31 January 2032.
UK Tax on Rental Income for Non-Residents: Deadlines and Filing Rules
Missing your filing deadlines can lead to penalties and higher UK tax on rental income for non-residents.
If your rental income is more than £1,000 and you made a profit in the tax year, you are required to declare this to HMRC via a self-assessment tax return. You must first register for self-assessment via Check how to register for Self Assessment – GOV.UK.
The deadline to register for self-assessment is 5 October following the end of the tax year. i.e. for 2025/26 UK tax returns, you must register by 5 October 2026.
Once registered, HMRC will issue you with a Unique Taxpayer Reference (UTR) which is a 10 digit identification number necessary to file your tax return.
The deadline to file your tax return and pay any outstanding liabilities is 31 January following the end of the tax year. i.e. the 2025/26 UK tax return filing and payment deadline is 31 January 2027.
HMRC will levy interest and penalties if your tax return and payments are not made by this date.
For help in determining whether you have a tax return filing obligation and support with preparation and submission of your tax return, please contact us to schedule a free no obligation consultation via: Contact Expat Tax Solutions UK
UK Tax on Rental Income for Non-Residents FAQs
Do I have to pay UK tax on rental income for non-residents?
Yes. UK rental income is UK sourced and therefore taxable in the UK irrespective of your residence status. UK tax on rental income for non-residents is payable unless your total rental income for the tax year is less than £1,000, in which case you do not need to declare or pay tax on it due to the Property Allowance.
Do I still get the Personal Allowance as a non-resident?
Not all UK tax non-residents are entitled to the personal allowance. British citizens and citizens of the European Economic Area (EEA) are entitled to the personal allowance as are some other citizens and residents of other countries however we recommend you obtain advice if you are unsure.
How do I declare and pay UK tax on rental income for non-residents?
Rental income is declared through a self-assessment tax return. The deadline to file your return and pay the relevant tax is 31 January following the end of the tax year. I.e. the deadline for the 2025/26 tax year is 31 January 2027.
In addition, non-residents must register under the non-resident landlord scheme otherwise 20% UK tax on rental income for non-residents should be withheld by the agent/tenant.
What are the penalties if I don't declare UK tax on rental income for non-residents?
If a tax return is filed late, a £100 late filing penalty applies. Penalties are levied while the return remains outstanding with up to £1,600 of penalties applying to tax returns that are one year late. In addition, late payment penalties and interest apply relating to unpaid tax. HMRC may also levy further penalties if they believe tax returns were deliberately not filed.
Get Expert Help With UK Tax on Rental Income for Non-Residents
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