Can I be a resident landlord whilst temporarily non-resident in the UK? (for the 2016-2017 tax year only)

[srs259]

In 2012 I bought my first home, in Bristol. In 2014 I took in my first lodger. I now have 3 lodgers (across 2 floors). I provide my lodgers with furnished accommodation, I retain access to all rooms in my home, they have no locks on their bedroom doors or exclusive use of any area of the property, I pay for a cleaner to enter their rooms regularly, I pay all council tax and energy bills, and my banking and voting is registered to this address. It is my main residence.

In April 2016 I went to Australia for a working holiday but returned home at times to live in my house. I did not move out of my home and all my belongings remained there for the duration of my time in Australia. I could have returned home at any time and been able to live in my house with my lodgers. The lodgers were in place and living with me before I left and are still in place upon my return.

I did not have a main residence in Australia as I moved all over the country and lived in motels and hotels whilst working (it was not just a holiday). I did however only spend 15 days of the 2016-2017 tax year in the UK (so am classed as an automatic non-resident for tax purposes for that year), but what is my landlord status for the 2016-2017 tax year?

I believe that I can still declare my Bristol home as my main residence (because it is the quality and not the quantity of occupation at my main residence that is important with regards to whether it can still be classed as such and I did not have another main residence during that period) but then how does this affect my ‘resident-landlord' status given that I am a temporary non-resident for that year? Is this possible in the eyes of the law? i.e. can I be a resident landlord whilst temporarily non-resident in the UK? It sounds contradictory.

I am not sure my lodgers met tenancy criteria or that I have met live-out-landlord status or AST criteria.

Many thanks in advance for any advice - it is much appreciated. Kind thanks

[maths]

You will be non-UK resident for UK tax purposes if you were resident in any one or more of the tax years pre 16/17 and did not spend more than 15 days in the UK.
You seem to meet this test.

However, it is HMRC's view that If you live abroad for 6 months or more per year (as you did in 16/17) you’re classed as a ‘non-resident landlord’. In fact even if you were UK resident for 16/17 for UK tax purposes, satisfaction of the 6 months test would still mean that you’re a non-resident landlord.

[srs259]

Thank you very much for replying - it is hugely appreciated.

If you can please give any advice on how I now retrospectively declare myself a non-resident landlord for just that single tax year (2016-2017) that would be very much appreciated. I am not an ex-pat and I don't intend to live abroad again - I just worked abroad for a year and left my lodgers in place. Plus I am obviously now back to being a resident landlord so whilst I presumably need to enter the NRL Scheme for the 2016-2017 tax year, I won't need to be enrolled in it ongoing as I won't be out of the UK for more than 6 months this year.

Q1) Will I be fined for not realising I was a NRL for that single year, or will I be ok because the deadline for the 2016-2017 tax return has not yet passed?

Having looked at the NRLi1 form it says this...

'To get your UK rental income paid without deduction of UK tax if you’re an individual landlord of a UK property and NORMALLY live outside the UK, you can:

use the online service (sign in or set up a Government Gateway account)
fill in form on-screen, print and post to HM Revenue and Customs (HMRC)'

Q2) I don't NORMALLY live outside the UK, it was a one off - is this still the form I should complete?

Q3) Also, I have already been paid rent gross (as I thought I was a resident landlord and as a sole trader also, was simply planning to declare it on my self assessment tax return). Should I just fill in the NRLi1 form online anyway (despite it being retrospective)? Or do I need to write to HMRC to explain?

Q4) Plus, I am now back to being a resident landlord so how do I undo the NRLi1 form for the 2017-2018 tax year?

Q5) Can you please clarify what tax I will pay on my UK rental profit for the 2016-2017 tax year. Given I had no UK earnings, will it all come under my personal allowance of £11000? (I am a UK Citizen).

MANY THANKS

[maths]

The non-resident landlord scheme is optional. It is designed to enable a non-resident landlord to receive rents gross ie without a 20% tax deduction at source. THus, cash flow is improved.

The obligation to deduct tax at source lies with the tenant although in many cases the tenant is unaware of this obligation.

Given you are a non-resident landlord only for 16/17 and rents were received by you gross it is pointless to register as a non-resident landlord.

Simply file your Tax Return including the Supplementary Property Pages and the Residence Pages by the normal deadline.

Others more familiar re the non-resident scheme may comment further (or correct any incorrect statements made by me).

[srs259]

Wonderful. Thank you so much.