Setting up landlord tax (UK only)

Owned by Fiona Wilson, created
Last updated: Mar 01, 2023
3 min read

This guide has been reviewed against our global client base and classed as relevant to UK only

Overseas landlords are required to have tax deducted by the agent under the non-resident landlord scheme - as rent is collected by the agent, the tax amount is deducted and held over to be paid to HMRC on a quarterly basis

Each individual landlord record has a percentage ownership of properties owned by the landlord record - if this percentage is not entered, then it is assumed that each landlord has an equal share - this setting will govern the proportion of any rental income received and any corresponding tax liabilities

1. Setup tax in the landlord Financial screen

From the landlord record: 

  • In the Financial panel, click edit (pencil) icon to view Landlord Financial Details screen

  • Use the Non-Resident Landlord panel to enter the required details:

    • Deduct tax: when this is selected, the system will deduct tax from all rent income
      The date ranges allow for tax to be taken for certain periods of the year

    • Do not deduct tax: this should be selected in cases where an overseas landlord is exempt and the NRL reference completed

    • N/A: this option should be selected for a standard UK resident landlord

2. Tax invoice/credit/refund notes

Tax invoice
An invoice for tax is raised at the point a tenant credit is allocated to a tenant invoice for rent. The rational for this is that until the funds are allocated against a rent invoice, it is unknown what the money is for. The tax point date for the tax invoice is the date of the allocation.

Tax credit
A credit for tax is only raised at the point a landlord payment that contains tax deductible invoices is posted. This process is iterative, as if a landlord invoice is only part paid and a tax credit is due to be raised, the landlord payment routine will set the pending credit against the outstanding balance invoice balance. The same is true of any subsequent credits until there are no further credits due.

Tax refunds
Upon receipt of an NRL8, the date that the exception is from should be entered in Landlord Financial Details (shown in step 1). After this, the next time a landlord payment is posted, an adjustment will be made in line with the landlord income and expenditure to the date entered.

3. Pay tax to HMRC using Landlord Tax Payment Run

Every quarter, tax must be paid to HMRC

From the main Lettings menu:

  • Click Landlord Tax and select Tax Payment Run

  • Click Date Range and change to Custom

    • Change the date to the beginning of the tax year and to the end of the quarter you are paying
      This is to ensure any adjustments in previous quarters are picked up

  • Double-clicking an entry will open the landlord’s tax screen for a specific tax breakdown

  • A breakdown in the form of a report can also be obtained by clicking Print
    This can be produced in PDF or Excel format

  • Un-tick any entries to remove them from the Landlord Tax Payment Run

  • Click Post to post the entries ready for the BACS and Cheque Run