BUZZ ACCOUNTINGHow much of your withheld rent comes back?
Your agent deducts 20% of the rent, not 20% of the profit — so it ignores your mortgage interest, your costs and your personal allowance. This estimates the difference.
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Put in your rental figures
| Rental profit | — |
| Tax actually due on it | — |
| Tax your agent has handed to HMRC | — |
The 20% comes off your rent, not your profit
Which means it ignores your mortgage interest, your agent’s fees, the boiler you replaced and your personal allowance. For a jointly owned house with a mortgage, the tax actually due is frequently nil — and everything withheld comes back.
Why 20% of your rent disappears
Under the Non-resident Landlord Scheme, if your usual place of abode is outside the UK, your letting agent is legally obliged to deduct basic-rate tax from your rental income and pay it to HMRC quarterly. If you have no agent and the rent is more than £100 a week, the duty falls on your tenant instead — which is a conversation nobody enjoys.
This is not a penalty and not a mistake. It is a withholding mechanism, and it exists because HMRC has no easy way to chase a landlord who lives in Dubai. The deduction is made on the rent, not on your profit, so it takes no account of your mortgage interest, your agent's fees, the boiler you replaced, or your personal allowance.
That is why the withheld amount and the tax you actually owe are usually very different numbers, and why a refund is the normal outcome rather than the exception.
How to make it stop
One form: the NRL1. It asks HMRC to approve you to receive rent gross, which the great majority of applications achieve — the test is essentially that your UK tax affairs are up to date and you undertake to keep filing. Once approved, HMRC writes to your agent and the deductions stop from the next quarter.
Approval is not retrospective. Tax already withheld is not refunded by the NRL1 — it comes back through your Self Assessment return, which is why the two jobs are done together.
What the estimate above does and does not do
It applies 2025/26 rates: a personal allowance of £12,570, basic rate of 20% on the first £37,700 of taxable income, 40% above that to £125,140, and 45% beyond. Mortgage interest is treated correctly as a 20% tax reducer rather than a deduction from profit — the change that caught out every landlord when it was phased in, and the single most common error on returns people file themselves.
What it cannot know: whether you keep the personal allowance (British and most EEA citizens do, some nationalities do not, and a treaty sometimes decides it), whether the property is jointly owned, what capital allowances or replacement-of-domestic-items relief you might claim, or whether losses are carried forward from earlier years. Treat the number as a planning figure, not a refund claim.
Joint owners
Two names on the title means two returns, two NRL1 applications, and the income split according to your beneficial interest — usually 50/50 for a married couple, but not always. Each of you gets your own personal allowance, which is why a jointly owned let very often produces no tax at all and a full refund of everything withheld.
Our fee is £349 a year for the first property including the NRL1, £75 for each further property, and £150 for the second owner's return.
Asked about this constantly
Why is my agent taking 20% of my rent?
The Non-resident Landlord Scheme obliges them to, once your usual home is outside the UK. It is withholding, not a penalty, and it is calculated on rent rather than profit.
How do I stop it?
One form, the NRL1. HMRC approves the great majority, writes to your agent, and the deductions stop from the next quarter. It is included in our £349 fee.
Will I get the tax already withheld back?
Through your Self Assessment return, not through the NRL1 — approval is not retrospective. For most landlords the refund is larger than our fee in year one.
We own it jointly. Does that change things?
Yes, usually in your favour. Two owners means two returns and two personal allowances, which very often means no tax at all and a full refund of everything withheld.
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