A non-resident company that earns rental income from UK property pays UK Corporation Tax on that income at rates between 19% and 25%, the same rates that apply to UK-resident companies. This has been the position since 6 April 2020, when the Finance Act 2019 moved foreign corporate landlords out of Income Tax and into the Corporation Tax regime.1GOV.UK. Income Tax Changes to the Regulations for the Non-Residents Landlord Scheme The change came with a new set of registration, filing, and payment obligations, and the penalties for missing them have grown for accounting periods from April 2026 onward.
What Income Is Caught
Schedule 5 of the Finance Act 2019 brought non-UK resident companies that carry on a UK property business, or that receive other UK property income, within the charge to Corporation Tax.2Legislation.gov.uk. Finance Act 2019 The scope is broad: rental income from traditional leases, income from licensing land, and other receipts tied to property ownership all fall within it.3GOV.UK. Paying Corporation Tax if You’re a Non-Resident Company Landlord
Gains on the disposal of UK land and property are now taxed the same way. A sale of a rental property and the ongoing rent it produces are both reported through the Corporation Tax return.4GOV.UK. Tell HMRC About Capital Gains Tax on UK Property or Land if You’re Not a UK Resident
The Rates
The main rate is 25% on profits above £250,000. The small profits rate of 19% applies where profits are £50,000 or less. Between those two figures, marginal relief tapers the effective rate between 19% and 25%.5GOV.UK. Corporation Tax Rates and Allowances
One point catches groups off guard. If your company has associated companies, the £50,000 and £250,000 thresholds are divided by the total number of associated companies. Two companies are associated when one controls the other, or when the same person or group controls both. A non-resident landlord with three associated companies hits the 25% main rate at just £83,333 of profits rather than £250,000.6GOV.UK. Corporation Tax Rates, Expenses and Reliefs
Registering With HMRC
A non-resident company must register for Corporation Tax within three months of becoming chargeable. HMRC needs the company’s full legal name as registered in its home jurisdiction, the country of incorporation, the registered office address, and the date the UK property business started. On registration, HMRC issues a ten-digit Unique Taxpayer Reference (UTR) that is used on every future filing and payment.7GOV.UK. Find Your UTR Number
Missing the deadline exposes the company to failure-to-notify penalties, calculated as a percentage of the tax that went unpaid because of the failure. HMRC applies a maximum of 30% for a non-deliberate failure, 70% for a deliberate one, and up to 100% where the failure was deliberate and concealed.8GOV.UK. Corporation Tax Penalties A reasonable excuse defense exists but is unreliable after the fact, so registering early is the safer path.
Withholding Under the Non-Resident Landlord Scheme
Corporation Tax is the underlying charge, but the Non-Resident Landlord Scheme (NRLS) still operates as a withholding mechanism at the front end. A letting agent or tenant paying rent to a non-resident company that has not been approved for gross payment must deduct 20% of the rent and pay it to HMRC.9GOV.UK. What the Non-Resident Landlords Scheme Is The amount withheld is credited against the company’s Corporation Tax bill, so there is no double count, but the cash is tied up until the return is filed and any overpayment reclaimed.
To be paid gross, a corporate landlord applies to HMRC on form NRL2. Approval is granted where the company’s UK tax affairs are up to date, where it has no history of UK tax obligations, or where it does not expect a UK tax liability for the year of the application. For most companies that will owe tax anyway, the value of approval lies in cash flow rather than the ultimate tax bill.
Working Out Taxable Profit
Taxable profit is total gross rental income for the accounting period, less allowable expenses. The deductible categories are the same as for UK-resident corporate landlords: property management fees, insurance, professional fees, and day-to-day repairs. The line to watch is the one between repairs (revenue expenditure, deductible) and improvements (capital expenditure, not deductible from rental profits). Replacing a broken boiler like-for-like is a repair; upgrading to a higher-specification system is an improvement.
Corporate Interest Restriction
A company with net interest and financing costs above £2 million in a 12-month period must apply the Corporate Interest Restriction. Under the fixed ratio method, the interest deduction is capped at 30% of UK taxable profits before interest, tax, capital allowances, and certain other reliefs.10GOV.UK. Restriction on Corporation Tax Relief for Interest Deductions For a highly leveraged property company, that cap can lift taxable profit meaningfully. Companies below the £2 million threshold deduct their interest in full.
Capital Allowances and Transitional Losses
Capital allowances on qualifying plant and machinery within the property reduce taxable profit further. Qualifying assets include heating systems, lifts, and air conditioning units. Identifying which fixtures qualify is worth doing carefully, particularly on newly acquired commercial property.
Companies that had cumulative Income Tax losses on their UK property business before April 2020 can carry those losses forward into the Corporation Tax regime. They offset future profits of the same UK property business and any related non-trade loan relationship profits, and they must be used before any losses generated under Corporation Tax from April 2020 onward. These transitional losses are not subject to the Corporation Tax loss restriction that applies to losses arising on or after 1 April 2017, but they cannot be set against capital gains.3GOV.UK. Paying Corporation Tax if You’re a Non-Resident Company Landlord
Filing the Company Tax Return
Non-resident companies file on form CT600, submitted online. Paper is only accepted where the company has a reasonable excuse for not filing electronically.11GOV.UK. File Your Accounts and Company Tax Return Accounts and computations must be in iXBRL format where the accounts are prepared under an accounting standard supported by an HMRC-accepted XBRL taxonomy; where the standard is not supported, the accounts can be attached as a PDF.12GOV.UK. Businesses XBRL Guide
The filing deadline is 12 months after the end of the accounting period. Late filing triggers automatic flat-rate penalties, and for returns with filing dates from 1 April 2026 onward those penalties have doubled:
- Up to 3 months late: £200
- More than 3 months late: an additional £400
If the return is still outstanding six months after the deadline, HMRC adds a tax-related penalty of 10% of the unpaid tax. Another 10% is added at 12 months late.13HM Revenue & Customs. Corporation Tax Penalty Determinations CT211 Notes These stack. A return filed 13 months late could incur £600 in flat-rate penalties plus 20% of the outstanding tax.
Payment Deadline and Interest
Corporation Tax is due nine months and one day after the end of the accounting period. That is three months earlier than the filing deadline, so the tax has to be paid before the return is submitted. Payments are made electronically using the ten-digit UTR and the payment reference HMRC provides.
Late payments carry interest at 7.75% per annum as of January 2026, accruing daily from the due date until the payment clears.14GOV.UK. HMRC Interest Rates for Late and Early Payments HMRC adjusts this rate periodically in line with the Bank of England base rate, so check the current figure before budgeting. The interest is not a penalty and is charged even where the company has a reasonable excuse for the delay.
The ATED Charge on UK Residential Property
Corporation Tax is not the whole picture where the company owns UK residential property valued above £500,000. The Annual Tax on Enveloped Dwellings (ATED) is a separate flat annual charge that sits on top of Corporation Tax and applies whether or not the property produces rental income. Rates for the period 1 April 2026 to 31 March 2027 are:15GOV.UK. Annual Tax on Enveloped Dwellings
- £500,001 to £1 million: £4,600
- £1,000,001 to £2 million: £9,450
- £2,000,001 to £5 million: £32,200
- £5,000,001 to £10 million: £75,450
- £10,000,001 to £20 million: £151,450
- Over £20 million: £303,450
Properties are revalued every five years. For the chargeable periods running from 2023 to 2028, the relevant valuation date is 1 April 2022, or the date of acquisition if later.
Most non-resident corporate landlords qualify for relief that reduces the ATED charge to nil, the common one being relief for property let commercially to a third party who is not connected with the owner. The trap is that even where relief eliminates the charge, the company must still file a Relief Declaration Return through HMRC’s ATED online service.16GOV.UK. Annual Tax on Enveloped Dwellings Reliefs and Exemptions Companies often miss it on the assumption that no charge means no obligation.
Double Taxation Relief for Foreign Parent Companies
A US-incorporated company can face UK tax on its rental income and US tax on the same income. The US-UK Income Tax Treaty, signed in 2001, resolves this. Article 6 allows the UK to tax income from real property situated in the UK, including rental income and income from the direct use or letting of land.17U.S. Department of the Treasury. U.S.-U.K. Income Tax Treaty The treaty does not exempt the income from US tax; it eliminates the double charge by allowing the US to credit the UK tax paid.
A US C-corporation claims the credit on IRS Form 1118 filed with its federal return.18Internal Revenue Service. About Form 1118, Foreign Tax Credit – Corporations The credit is capped at the US tax attributable to the foreign-source income, so excess UK tax cannot offset US tax on unrelated domestic income. Where the UK rate exceeds the effective US rate on the same income, the excess credit can generally be carried forward. Companies with multiple types of foreign income need a separate copy of Form 1118 for each income category, because credits from one category cannot offset tax in another.
Non-US parent companies should check the treaty between their home country and the UK. Most major economies have one, and the mechanism for relieving double taxation follows the same general pattern of crediting UK tax against home-country liability.