PLEASE NOTE - NRL Tax functionality supports the 2024-2025 tax year and onwards. It is not possible to manage NRL tax in Street from before 1st April 2024.
NRL Tax Introduction
The Non-Resident Landlord (NRL) Scheme is a scheme for applying withholding tax to the UK rental income of persons whose usual place of abode is outside the UK. Such persons include individuals, companies and trustees who receive UK rental income and usually live or are based outside the UK.
NRL Tax within Street
Street has an extremely thorough process for checking and calculating NRL tax and it's extremely important to understand how this process works.
When an owner has been setup as a NRL, Street will look at the dates that the owner is living overseas and begin calculating how much tax they owe for any future payments and add that as a deduction on the Allocate Funds page.
However it's important to note that Street will also check for any historic owner payments that were not taxed but were due to be taxed at the time due to NRL not being setup. What this means is if you have made owner payments in Street before setting the owner up as an NRL, Street will intelligently look back at those payments and calculate any tax owed. Below is an example of how this works.
Example
A tenancy began on 1st April and is active, with a rent charge of £1,100 and a management fee of £100, meaning the owner will be paid £1,000 each month.
It is now 1st June 2024 and the owner has been paid their rental income for April 2024 and May 2024, at £1,000 per month for a totalling £2,000.
On 1st June, their NRL settings are updated, telling Street they have been living overseas since 1st January 2024.
In the June payment, the owner will be owed another £1,000 rental income, but now NRL tax will be calculated at 20% and £200 will be deducted from that payment. However, Street will also refer back to those previous two payments, in April and May, and see that the owner was overseas during these months and therefore should have paid NRL tax on that income.
In this case, when handling the June rent payment on Allocate Funds, you would see an income of £1,100 (the rent), a deduction of £100 (the management fee) and a deduction of £600 for NRL tax (the £200 from June, plus £200 from April and £200 from May), resulting in an owner payment of £400 (£1,100 - £100 - £600).
NRL Tax Settings
Before you start setting up or managing NRL tax for owners, it's important to setup your NRL settings. First, head to Settings (left side panel at the bottom) > Company Settings > Accounting > NRL Tax. Here, you can setup the account number, sort code and unique reference for your NRL payments to HMRC.
Note - You must be a Company Admin to access the NRL tax settings section.
Once your HMRC payment details are saved, you can go back to this page to edit them at anytime.
For more information on other accounting based settings, see this help article.
Now that you have an understanding of how NRL works in Street and have setup the basic settings, you can begin setting up individual owner NRL status. See our NRL Tax help article for more information.