Form NRL2 is the application a non-resident company files with HM Revenue and Customs so its UK rental income can be paid without tax deducted at source. Until HMRC approves the application, any letting agent handling the property must withhold basic-rate income tax (currently 20%) from the rent before passing it on, and tenants paying the company directly more than £100 a week must do the same. Approval does not make the rent tax-free. It lets the company receive the full amount and settle any UK liability through its own corporation tax return.
Whether Your Company Qualifies
HMRC publishes three versions of the non-resident landlord application. NRL1 is for individuals, NRL2 is for companies, and NRL3 is for trusts.1HM Revenue & Customs. What the Non-Resident Landlords Scheme Is A corporate trustee needs NRL3, not NRL2.
To apply on NRL2, the company must meet all three of these conditions:2GOV.UK. Apply as a Company to Receive UK Rental Income With No UK Tax Deducted
- It is incorporated under the laws of a jurisdiction outside the UK.
- It has no UK place of business, branch, or other establishment.
- It is not resident in the UK for corporation tax purposes.
HMRC will only approve the application if the company’s UK tax affairs are up to date. A company that has never had a UK tax obligation, or does not expect to owe UK tax for the year of application, also satisfies this test.1HM Revenue & Customs. What the Non-Resident Landlords Scheme Is Outstanding returns or unpaid liabilities will lead to refusal until they are cleared.
What to Gather Before You File
Most stalled applications come down to missing or inconsistent details. Have everything below ready before you open the form.
Company Details
You need the company’s full legal name exactly as shown on its certificate of incorporation, its registered office address, and its country of incorporation. If the company already has a Unique Taxpayer Reference from an earlier Self Assessment or Corporation Tax filing, include it so HMRC can link the application to the existing record.2GOV.UK. Apply as a Company to Receive UK Rental Income With No UK Tax Deducted The form also asks for the date the company first received UK rental income and the date it became non-resident for UK tax purposes.
Property and Tenancy Information
List the full address of every UK property producing rental income for the company. For each one, give the start date of the current tenancy agreement and the expected annual gross rent. HMRC uses these to gauge the scale of the letting and check the withholding history.
Letting Agents and Direct-Paying Tenants
Give the name and address of every letting agent managing a property for the company. If any tenant pays rent directly to the company rather than through an agent, list that tenant’s name and address too. HMRC sends a separate authorisation notice to each agent and direct-paying tenant on the form, so an inaccurate address means that agent keeps withholding tax until the correct notice reaches them.
Authorised Signatory
The form must be signed by someone authorised to act for the company, such as a director or company secretary. Have that person’s name and contact details on hand. If a tax agent is filing on the company’s behalf, the authorisation for that agent should already be recorded with HMRC.
How to Submit the Form
You can file online or by post. The online route is faster and gives you a tracking reference straight away.
Online
The digital form runs through HMRC’s online service for companies and trusts. You sign in with a Government Gateway user ID and password, and you can create an account during the process if the company does not already have one.3GOV.UK. Non-Resident Landlords: Company or Trustee Application to Have UK Rental Income Without Deduction of UK Tax On submission you receive a reference number for checking progress.2GOV.UK. Apply as a Company to Receive UK Rental Income With No UK Tax Deducted
By Post
Download the PDF version of Form NRL2, complete and sign it, then post it to the address printed on the form. On the current version that address is:
CAR – Personal Tax International
Unit 406
St. John’s House
Merton Road
Liverpool
L75 1BB
Use tracked or recorded delivery so you have proof of receipt, and always check the address on the version you download, since HMRC occasionally redirects post to different offices.
What Happens After You Apply
If HMRC approves the application, it issues two separate notices. One goes to the company or its authorised tax agent confirming approval and giving a reference number. Another goes to each letting agent or direct-paying tenant named on the form, authorising them to pay rent without deducting tax.2GOV.UK. Apply as a Company to Receive UK Rental Income With No UK Tax Deducted
Both notices state the date from which rent should be paid gross. That is normally the first day of the quarter in which HMRC received the application, so an application received in May would typically take effect from 1 April.2GOV.UK. Apply as a Company to Receive UK Rental Income With No UK Tax Deducted Keep the approval letter with the company’s permanent records; you may need it during a tax enquiry or when appointing a new letting agent.
When HMRC Can Withdraw Approval
Approval is not permanent. HMRC can revoke it if:
- Information in the original application turns out to be incorrect.
- HMRC is no longer satisfied the company will meet its UK tax obligations.
- The company fails to supply information HMRC has requested.
If approval is withdrawn, the letting agent or tenant returns to deducting basic-rate tax from every rent payment until a fresh application is approved. Keeping corporation tax filings current is the simplest way to avoid that.
Tax You Still Owe After Approval
Receiving rent gross does not make the income exempt. Since April 2020, non-resident companies with UK rental income have been within the charge to corporation tax rather than income tax. The main rate of 25% from 1 April 2023 applies to non-resident companies, and HMRC has confirmed the small profits rate is not available to them.4Chartered Institute of Taxation. Small Profits Rate and Non-Resident Companies The company must register for corporation tax, file an annual return, and pay any liability on time. Falling behind is one of the fastest ways to lose NRL approval.
A separate charge, the Annual Tax on Enveloped Dwellings, applies to companies that own UK residential property valued at more than £500,000, whether or not the property is let.5GOV.UK. Annual Tax on Enveloped Dwellings – The Basics ATED sits on top of any corporation tax on rental profits, and reliefs for property let commercially to unconnected third parties still require a relief declaration return. NRL2 approval has no effect on ATED, so treat it as a separate filing to check.