Non-resident landlords: The tax changes coming in April 2027
April 2027 brings two distinct tax changes that will affect landlords who own UK residential property but are not resident in the UK for tax purposes. The first is an increase in the income tax rates applied to UK property income, which affects all individual landlords including non-residents. The second is the extension of Making Tax Digital for Income Tax to cover non-resident landlords who were automatically deferred from the April 2026 start date. Both require action before they take effect, and understanding them together gives a clearer picture of what the coming year requires.

Who counts as a non-resident landlord
For the Non-Resident Landlords Scheme, HMRC treats you as a non-resident landlord if your usual place of abode is outside the UK. This is not always the same as being non-UK resident for tax purposes under the Statutory Residence Test. It can include UK nationals living abroad who still let property in England, and overseas owners of UK buy-to-let property.

Under the Non-Resident Landlords Scheme, letting agents, or in some cases tenants, must register with HMRC and deduct income tax from rental payments before passing the rent to the landlord, and pay those deductions to HMRC directly. Landlords who have applied for and received HMRC approval using form NRL1 can receive their rent gross and account for the tax through Self Assessment instead.

Change one: Property income tax rates are rising
From 6 April 2027, the UK government is introducing a separate, higher set of income tax rates specifically for property income, across all rate bands. These rates were announced at Budget 2025 and, as currently legislated, apply from that date.

The rates on property income change as follows from 6 April 2027: the basic rate rises from 20% to 22%, the higher rate rises from 40% to 42%, and the additional rate rises from 45% to 47%. These are the rates applied to rental profit after allowable expenses and reliefs have been deducted. The changes do not affect landlords who hold property through a limited company, which pays corporation tax rather than income tax.

For non-resident landlords operating under the NRLS, the withholding rate applied by letting agents will increase from 20% to 22% from April 2027. On the positive side, the tax credit for mortgage interest and other finance costs will also be calculated at 22% rather than 20% from April 2027.

Change two: Making Tax Digital arrives for non-resident landlords
Non-resident landlords who filed SA109 supplementary pages as part of their 2024/25 Self Assessment return received an automatic deferral from Making Tax Digital, and those who did not qualify automatically could apply to HMRC. From 6 April 2027, deferred non-resident landlords with qualifying income above £30,000 will need to join.

Non-resident landlords who do not hold a UK National Insurance number may qualify for an exemption from Making Tax Digital. Whether the exemption applies depends on individual circumstances and is worth confirming with HMRC or a tax adviser before April 2027.

What non-resident landlords should do now
For the tax rate change, review the expected rental profit position for 2027/28 against the new rates and model what the increased liability looks like. If a letting agent is currently withholding at 20%, they will increase to 22% from April 2027 automatically, but it is worth confirming this with your agent before the change date.

If the deferral ends for you in April 2027, check whether your income is above the threshold and put compatible software in place in good time, ideally with the help of a tax adviser.

Letting from overseas? Our lettings team can manage your property and handle tax deductions under the scheme for you