Own a rental abroad? How to file tax returns as a non-resident landlord

If you own a rental property in the UK or South Africa but do not live there, you are required to complete a personal tax return in that country. Many expatriates rent out their homes after moving abroad, and even if rental income is their only local earnings, a return still needs to be filed.

However, many people assume that filing a tax return in the country where they live is enough and that they don’t need to declare income where their property is located.

To remain compliant with HMRC and SARS, it is important to understand when and how to submit a personal tax return. Non-resident landlords must submit a tax return in the UK or South Africa, regardless of where the homeowner is living.

Do non-resident landlords pay UK tax?

If you own a rental property in the UK but live abroad, your rental income remains subject to UK tax reporting requirements.

Under UK tax law, letting agents or tenants may be required to withhold basic-rate tax before paying rental income to you. Alternatively, you can apply under the Non-Resident Landlord Scheme (NRLS) to receive rental income without tax deducted, provided your tax affairs are up to date.

Regardless of whether tax is withheld at source, you must submit a UK Self-Assessment tax return each year to declare your rental income.

See also: Do you have to pay UK tax on foreign rental income?

Tax obligations for non-resident landlords in South Africa

For non-residents, rental income from property in South Africa is considered South African-sourced and must be declared to SARS, regardless of where you live or where the income is received.

Tax is generally calculated on net rental profit after allowable expenses, such as bond interest, rates and taxes, insurance, maintenance, and agent fees. Even if a rental agent manages the property, the responsibility to submit a tax return remains with the property owner.

If the property is sold, any gain may also be subject to Capital Gains Tax in South Africa.

Double tax agreements: avoiding being taxed twice

Double tax agreements between the UK and South Africa determine which country has the right to tax specific types of income, including rental income. Their purpose is to prevent the same income from being taxed twice.

For example, if you are a South African tax resident earning rental income from a UK property, that income must still be declared in the UK. However, any tax paid in the UK may be credited against your South African tax liability.

This ensures that while income may need to be reported in both countries, you are not taxed twice on the same earnings.

Common misconceptions

Many expatriates assume that paying tax in their country of residence covers their obligations everywhere. However, rental income is generally taxed in the country where the property is located and must be reported there.

Failing to submit a required tax return can result in penalties, interest, and unnecessary compliance issues.

Key tax obligations for non-resident landlords in the UK and South Africa

• Non-residents with rental property in the UK or South Africa must usually file a local tax return.
• Filing in your country of residence does not replace your obligations where the property is located.
• Tax is generally calculated on net rental profit, not gross income. While the majority of the rental expenses are the same in both countries, there are some differences that can change the net rental profit that needs to be declared in each country.
• Double tax agreements help prevent the same income from being taxed twice.
• Understanding your obligations helps you remain compliant and avoid penalties.

Owning property abroad can be a lucrative investment, but it comes with clear reporting responsibilities. Understanding your obligations as a non-resident landlord in the UK or South Africa ensures you stay compliant, avoid penalties, and manage your rental income effectively.

Get expert advice on your UK and South African tax obligations and avoid costly mistakes. Book a consultation with our team today at [email protected] or call +44 (0) 20 7759 7553.