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What is HMRC NRLY Form

Updated: Jan 11

The HMRC NRL6 Form, titled "Certificate of Tax Liability to be Provided to Non-Resident Landlords by UK Letting Agents or Tenants," is a document used in the UK to record the tax deducted from the rental income of landlords residing outside the UK. This form is part of the Non-Resident Landlord Scheme (NRLS) and is issued by letting agents or tenants who deduct tax from the rental payments. It serves as a formal statement of the tax amount withheld and is essential for tax compliance and reconciliation for non-resident landlords.


What is HMRC NRLY Form

The NRLY Form, standing for Non-resident Landlords Scheme - Annual Information Return, is a mandatory document in the UK for letting agents or tenants who handle rent for landlords residing outside the UK. It's used annually to report the total rental income paid to these non-resident landlords and any tax deducted from this income under the Non-resident Landlords Scheme. The form ensures compliance with HMRC regulations regarding the taxation of rental income earned by non-resident landlords from UK properties.

 

The HMRC NRLY Form in the UK, formally known as the Non-resident Landlord: Annual Information Return, is a crucial document for managing the tax affairs of non-resident landlords in the UK. This article, divided into three parts, will explore the purpose, requirements, and implications of the NRLY Form, along with associated forms under the Non-resident Landlords Scheme (NRLS).

 


Overview of Non-resident Landlords Scheme (NRLS)

The NRLS is a system set up by HMRC (Her Majesty's Revenue and Customs) to collect tax on UK rental income of landlords who are not resident in the UK. Under this scheme, certain responsibilities fall on letting agents or tenants who pay rent directly to non-resident landlords.

 

Purpose of the NRLY Form

The NRLY Form is an annual information return required by HMRC. It must be completed by letting agents acting for landlords based outside the UK or tenants who have deducted tax under the NRLS. This form is essential even if no tax has been deducted under the scheme. The main purpose is to report rental income paid to non-resident landlords and any tax deducted from this income.

 

Who Needs to Complete the NRLY Form?

  • Letting agents representing non-resident landlords.

  • Tenants who are paying rent directly to non-resident landlords and are responsible for deducting and remitting the tax under NRLS.

 

Filing the NRLY Form

The NRLY form can be submitted either using the online form service or by post. For online submission, a Government Gateway user ID and password are needed. It’s important to note that specific schedules or details may not be required unless specifically requested by HMRC.

 

Key Dates and Deadlines

The annual return must be submitted by 5th July each year. This deadline is critical for compliance with the NRLS requirements.

 

Understanding the NRLS and Associated Forms

Apart from the NRLY form, there are other forms under the NRLS which cater to different scenarios:

  1. NRL1: For individual landlords applying to receive UK rental income without UK tax being deducted.

  2. NRL2: For companies in similar circumstances as NRL1.

  3. NRL3: For non-resident trustees.

  4. NRL4: Used by UK letting agents to register for the NRLS.

  5. NRL6: A certificate of tax liability, provided to non-resident landlords by UK letting agents or tenants who have deducted tax.

 

Tenant's Role in NRLS

Tenants who pay rent directly to non-resident landlords and are required to operate under NRLS have specific obligations. They must register with HMRC, deduct tax at the basic rate on the rent (currently 20%), and report it quarterly using the NRLQ form. In addition to the quarterly payments, tenants must also submit the annual NRLY form and provide the NRL6 certificate to the landlord by 5th July each year.

 

Record Keeping

Both letting agents and tenants must maintain detailed records related to the rent paid, correspondence with the landlord, and any expenses paid. These records are crucial for compliance and must be kept for at least four years.

 

The NRLY form is a vital component of the NRLS, ensuring that tax on rental income paid to non-resident landlords is appropriately managed and reported to HMRC. It is crucial for letting agents and tenants operating under this scheme to understand their responsibilities, comply with the filing requirements, and adhere to the deadlines to avoid any penalties. In the next part, we will delve deeper into the practical aspects of completing and submitting the NRLY form, along with a closer look at the other forms associated with the NRLS​​​​​​​​​.

 


Completing and Submitting the HMRC NRLY Form

 

Completing the NRLY Form

The NRLY form is essential for letting agents and tenants acting on behalf of non-resident landlords within the UK. It must be filled out annually to report rental income paid to these landlords and any tax deducted under the Non-resident Landlords Scheme (NRLS). The form can be submitted online or via post.

 

Online Submission

  • To submit NRLY Form online, agents or tenants need a Government Gateway user ID and password.

  • The NRLY Form can be accessed and submitted through HMRC’s official website.

Postal Submission

  • For those who prefer or are required to submit by post, the form can be downloaded, filled out, and sent to HMRC.

  • Accessible formats are available upon request for those using assistive technologies.

What to Include

  • Details of the rental income paid to the non-resident landlord.

  • Information on any tax deducted from this income.

  • No additional schedules are required unless specifically requested by HMRC.

NRLY Form Deadlines

  • The annual return must be submitted by 5th July of each year.

 

Associated Forms and Obligations

Letting agents and tenants managing properties for non-resident landlords must also be aware of other forms and obligations under the NRLS:

  1. NRL1, NRL2, NRL3 Forms: These are for non-resident landlords to apply for their rental income to be paid without UK tax deduction.

  2. NRL4 Form: For UK letting agents to register with HMRC for the NRLS.

  3. NRL6 Form: Certificate of tax liability, to be provided to the landlord by the agent or tenant who has deducted tax.

  4. Record Keeping: All parties must keep detailed records of rent paid, correspondence, and expenses for at least four years.


Tenant and Letting Agent Responsibilities

  • Tenants who pay rent directly to a non-resident landlord and withhold tax under the NRLS must register with HMRC, submit quarterly tax payments using form NRLQ, and file the NRLY form annually.

  • Letting agents have similar obligations, including registering with HMRC’s personal tax international division, calculating and remitting taxes quarterly, and filing the NRLY form annually.

  • Both tenants and agents must provide the landlord with a certificate of tax liability (NRL6).


Tax Calculations

  • Tax is calculated at the basic rate (currently 20%) on rent minus deductible expenses.

  • Deductible expenses include costs incurred wholly for the rental business and are not of a capital nature.

  • Agents must be reasonably satisfied that the expenses will be allowable for the landlord’s rental profits.

 

Penalties for Non-Compliance

Failure to comply with the NRLS requirements, such as late filing of the NRLY form or incorrect deductions, can result in penalties from HMRC.

 

Seeking Guidance

For detailed guidance, both tenants and letting agents can refer to HMRC’s guidelines and the NRLS resources available on the GOV.UK website.


Understanding and correctly handling the NRLY form and associated responsibilities under the NRLS is crucial for tenants and letting agents dealing with non-resident landlords in the UK. Ensuring timely submission and accurate reporting is key to complying with HMRC regulations and avoiding any penalties. In the next part, we will explore the implications of these requirements and provide tips for efficient management under the NRLS​​​​​​​​.

 

How to Fill Out the NRLS Form

Filling out the NRLY (Non-Resident Landlords Scheme - Annual Information Return) form is a critical process for letting agents and tenants who manage properties for non-resident landlords in the UK. This guide, based on the HMRC's notes for completing form NRLY, provides a step-by-step approach to accurately complete this form.

 


Who Should Fill in Form NRLY

  • Letting agents acting for non-resident landlords, regardless of whether tax has been deducted under the NRLS.

  • Tenants who have deducted tax under the scheme.

Accessing the Form

  • The form can be accessed online at HMRC’s website. You will need your customer reference, which begins with NA or NT, found on any correspondence from HMRC.

 

Completing the Form

 

Landlord’s Name and Address (Column A):

  • Enter names and addresses of all non-resident landlords for whom you have collected or paid rental income during the year.

  • Treat each owner of jointly-owned property as a separate landlord.

  • For individuals, include their current living address; for companies, their principal place of business; for trustees, their principal business address or usual place of abode.

Approval Number (Column B):

  • If HMRC has authorized you to pay rental income to a landlord without tax deduction, enter the landlord's approval number here.

Rental Income (Column C):

  • Letting agents should enter the total rental income received, plus any income paid away at their direction.

  • Tenants should enter the total rental income they paid.

Expenses (Column D):

  • If you have entered an approval number in column B, leave this blank.

  • Otherwise, enter the total deductible expenses paid by you or, in the case of letting agents, deductible expenses that were paid away.

Tax (Column E):

  • Enter the amount of tax deducted for each non-resident landlord and accounted for on the quarterly return forms NRLQ.

Continuation Sheets:

  • If you need more space, use form NRLY Cont or make your own continuation sheet.

  • Enter the total tax from NRLY and all continuation sheets in box A on page 2.

Tax Paid Through the Year:

  • Enter the total figure of tax paid for each quarterly return made during the year.

  • Ensure that this total agrees with the total tax included in box A on page 2.

Providing Tax Deduction Certificates:

  • If you have deducted tax during the year, you must give the landlord a form NRL6 by 5th July.

  • The tax amount on this certificate must match what is entered in column E.

Returning the Form:

  • Once completed, send the form to Charities Savings and International, HM Revenue and Customs, BX9 1AU.

  • Ensure it reaches HMRC no later than 5th July.

 

Key Considerations

 

  • Accurate Information: Ensure all information is accurate and complete. Mistakes or omissions can lead to penalties.

  • Record Keeping: Keep records of all transactions and correspondence related to the property and NRLS for at least four years.

  • Deadlines: Adhere strictly to the submission deadline of 5th July each year.

 

Filling out the NRLY form is a mandatory annual process for letting agents and tenants dealing with non-resident landlords. Accurate completion and timely submission of this form are crucial for compliance with the NRLS. It is advisable to regularly consult HMRC’s guidelines and seek professional advice if needed to ensure that all requirements are met effectively.


Implications and Efficient Management of HMRC NRLY Form

 

Understanding the Implications of NRLS Compliance

Compliance with the Non-resident Landlords Scheme (NRLS) and proper submission of the NRLY form have several implications for letting agents, tenants, and non-resident landlords:

  1. Tax Liability: Non-resident landlords are subject to UK tax on their rental income, and the NRLS ensures proper tax withholding and reporting.

  2. Legal Obligations: Letting agents and tenants are legally required to withhold tax, submit returns, and maintain accurate records.

  3. Penalties for Non-Compliance: Failure to comply with NRLS requirements can result in financial penalties and legal repercussions.

 

Tips for Efficient Management

For letting agents and tenants managing properties under the NRLS, certain practices can ensure efficient and compliant management:

  1. Timely Submission: Adhering to the deadlines for NRLY and other related forms is crucial. The annual deadline for NRLY submission is 5th July.

  2. Accurate Record-Keeping: Maintaining detailed records of rental payments, tax deductions, and communication with landlords is essential. These records should be kept for at least four years.

  3. Understanding Deductible Expenses: Properly identifying and recording deductible expenses can accurately reflect the taxable rental income. It’s important to understand which expenses are deductible and which are not.

  4. Regular Communication: Keeping open lines of communication with non-resident landlords about their tax obligations and any changes in legislation or tax rates is beneficial.

  5. Utilizing Online Resources: HMRC’s website provides extensive guidance and resources for understanding and complying with NRLS requirements.

  6. Seeking Professional Advice: In complex situations, seeking advice from tax professionals or legal advisors can be prudent.

 

Implications for Non-Resident Landlords

Non-resident landlords must be aware of the tax implications of owning rental property in the UK. They should:

  1. Understand Their Tax Obligations: Being aware of how the NRLS affects their income and tax liabilities.

  2. Stay Informed: Keeping up-to-date with changes in UK tax laws that may affect their rental income.

  3. Engage with Agents/Tenants: Ensuring their agents or tenants are compliant with the NRLS to avoid any penalties.

 

The NRLY form and the broader NRLS are critical components of the UK tax system, ensuring that non-resident landlords pay the appropriate tax on their UK rental income. For letting agents and tenants, understanding and adhering to these requirements is crucial to avoid penalties and ensure legal compliance. Efficient management involves timely submissions, accurate record-keeping, understanding tax deductions, and maintaining clear communication. Non-resident landlords must be aware of their tax obligations and work closely with their agents or tenants to ensure compliance. By following these guidelines, all parties involved can navigate the complexities of the NRLS and ensure a smooth, compliant process for managing rental income tax for non-resident landlords in the UK.

 


How a Landlord Tax Accountant Can Help Manage Annual Information Return for Non-Resident Landlords through NRLY Form


How a Landlord Tax Accountant Can Help Manage Annual Information Return for Non-Resident Landlords through NRLY Form

In the realm of property management and real estate, particularly when dealing with non-resident landlords in the UK, the complexities of tax obligations can be daunting. This is where a specialist landlord tax accountant becomes invaluable, especially in managing the Annual Information Return for non-resident landlords through the NRLY Form. Here's a comprehensive insight into how these professionals can be instrumental in this process.

 

1. Expertise in Tax Laws and Regulations

  • Understanding of NRLS: Landlord tax accountants are well-versed in the Non-resident Landlords Scheme (NRLS), ensuring that they can adeptly handle the intricacies of the NRLY Form.

  • Up-to-date Knowledge: Tax laws and regulations are subject to frequent changes. A professional accountant remains updated on these changes, ensuring compliance and preventing potential legal issues.

 

2. Accurate Completion of NRLY Form

  • Error-Free Submission: Filling out the NRLY form requires attention to detail. An accountant ensures that all entries are accurate, reducing the risk of errors that could lead to penalties.

  • Time Efficiency: Professionals can complete the form efficiently, saving landlords and agents valuable time.

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3. Tax Planning and Advisory

  • Strategic Planning: Beyond compliance, tax accountants offer advice on tax planning to optimize the financial outcomes for non-resident landlords.

  • Tailored Solutions: Every landlord’s situation is unique. An accountant can provide personalized advice considering individual circumstances, such as tax residency status and implications for rental income.

 

4. Handling Complex Scenarios

  • Joint Ownership: In cases of jointly owned properties, accountants can navigate the division of income and expenses, ensuring that the NRLY form reflects each owner’s share accurately.

  • International Tax Implications: For non-resident landlords, there are often cross-border tax considerations. An expert accountant can manage these aspects effectively.

 

5. Liaison with HMRC

  • Representation: A landlord tax accountant can act as a liaison between the landlord or letting agent and HMRC, handling queries and correspondence.

  • Resolving Disputes: If there are discrepancies or disputes with HMRC, an accountant can provide the necessary representation and advice to resolve these issues.

 

6. Record-Keeping and Documentation

  • Organized Records: Keeping organized records is crucial for NRLS. Accountants ensure that all relevant financial transactions and documents are systematically recorded.

  • Access to Documents: In case of audits or inquiries from HMRC, an accountant ensures that all necessary documentation is readily available.

 

7. Financial Reporting and Analysis

  • Rental Income Analysis: Accountants can provide detailed reports on rental income, expenses, and net profits, aiding in financial decision-making.

  • Performance Assessment: They can help assess the financial performance of rental properties, offering insights for future investments or changes in strategy.

 

8. Advisory on Deductible Expenses

  • Maximizing Deductions: Accountants advise on the various expenses that can be deducted under the NRLS, ensuring landlords don’t miss out on legitimate tax-saving opportunities.

  • Compliance with Tax Laws: They ensure that all deductions claimed are in compliance with HMRC guidelines, preventing the risk of penalties.

 

9. Assistance with Online Filing

  • Digital Expertise: Many accountants are proficient in using online platforms for tax filing, which is increasingly becoming the norm. They can handle the electronic submission of the NRLY form efficiently.

 

10. Continuous Support and Consultation

  • Year-Round Assistance: Tax accountants offer ongoing support, not just during the tax filing season, ensuring that landlords are always in compliance.

  • Consultation on Property Transactions: They can provide valuable advice on tax implications for buying or selling rental properties.

 

Navigating the annual information return for non-resident landlords through the NRLY Form requires a nuanced understanding of tax laws, meticulous record-keeping, and strategic financial planning. A landlord tax accountant brings expertise, precision, and strategic insight to this process, ensuring compliance with HMRC regulations while optimizing the financial health of the rental business. Their role extends beyond mere compliance; they are strategic partners in managing the complexities of property tax for non-resident landlords. By engaging a specialized tax accountant, landlords and agents can navigate the challenges of the NRLS with confidence, ensuring their financial obligations are managed effectively and efficiently.



20 FAQs about the NRLY Form

 

1. Q: Can the NRLY Form be amended after submission? 

A: Yes, if you realize that there's an error in the NRLY Form after submission, you should contact HMRC as soon as possible to amend the information.

 

2. Q: What happens if I miss the 5th July deadline for NRLY Form submission? 

A: Missing the deadline can result in penalties. It's important to contact HMRC immediately to explain the delay and submit the form as soon as possible.

 

3. Q: Is electronic submission of the NRLY Form mandatory? 

A: While electronic submission is encouraged for efficiency, the NRLY Form can also be submitted via post if necessary.

 

4. Q: Can a non-resident landlord file the NRLY Form themselves? 

A: Generally, the responsibility lies with the letting agent or the tenant who pays rent directly to the non-resident landlord.

 

5. Q: Are there any exemptions to filing the NRLY Form?

A: There are no general exemptions; any letting agent or tenant paying rent to a non-resident landlord must file the NRLY Form.

 

6. Q: How do I know if a landlord is considered non-resident for NRLS purposes? 

A: A landlord is considered non-resident if their usual place of abode is outside the UK.

 

7. Q: Does the NRLY Form apply to short-term rentals?

A: Yes, the NRLY Form applies to all types of rental income, including short-term rentals, if the landlord is non-resident.

 

8. Q: Is there a minimum rental income threshold for the NRLY Form requirement? 

A: No, there is no minimum threshold; all rental income paid to non-resident landlords must be reported.

 

9. Q: How is rental income defined for the NRLY Form?

A: Rental income includes the total rent paid before any deductions, including service charges and similar payments.

 

10. Q: Can I authorize someone else to fill out and submit the NRLY Form on my behalf? 

A: Yes, you can authorize an agent or accountant to complete and submit the NRLY Form on your behalf.

 

11. Q: What should I do if I start or stop acting for a non-resident landlord within the tax year? 

A: You should still complete the NRLY Form for the period you acted for the non-resident landlord.

 

12. Q: Is there a specific format for the continuation sheet if more space is needed? 

A: You can use form NRLY Cont or create your own continuation sheet, ensuring it contains the necessary information as per the NRLY Form.

 

13. Q: How do I handle NRLY reporting for a landlord who becomes non-resident or returns to the UK within the tax year? 

A: You should report the period during which the landlord was non-resident on the NRLY Form.

 

14. Q: What are the penalties for inaccurately reporting on the NRLY Form? 

A: Inaccurate reporting can lead to penalties, including fines. The exact penalty depends on the nature and severity of the inaccuracy.

 

15. Q: How do I correct an NRLY Form submitted in a previous tax year? 

A: Contact HMRC directly to correct any errors on previously submitted NRLY Forms.

 

16. Q: Is NRLY Form submission different for corporate landlords? 

A: The process is the same, but corporate landlords' details should be correctly represented in the form.

 

17. Q: Are there specific guidelines for reporting rental income in foreign currency on the NRLY Form? 

A: Rental income should be converted to GBP using the appropriate exchange rate and reported in GBP on the NRLY Form.

 

18. Q: How does NRLY reporting work for properties managed by multiple agents? 

A: The agent who pays the rent to the landlord is typically responsible for NRLY reporting, but arrangements can vary, and joint responsibility may be established.

 

19. Q: What if a non-resident landlord has multiple properties? 

A: Each property's income should be reported separately on the NRLY Form.

 

20. Q: How long do I need to keep records related to the NRLY Form? 

A: You should keep all records related to the NRLY Form for at least four years for compliance purposes.

 


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