Each Client Account has the ability to be set to handle Non-Resident Landlord Tax functionality.

The following steps need to be taken to setup a Client Account within Re-Leased to handle this functionality:

  1. Set the check box to Withhold tax for non-resident owners on the Client Account Settings.  Checking this check box will mean that all income and expense Chart of Accounts are defaulted to be set as being applicable to withhold tax for. Also select the month the financial year ends. This should be set to March.
  2. Any income and expense Chart of Accounts codes that Tax should not be withheld for i.e. Service Charge Income, will need to be setup as a new Chart of Account with Non-Resident Income Taxable/Deductible flag set to NO. Note that this flag can only be changed when creating a new account. If you have an account that is set incorrectly, you will need to delete the account and create a new one.
  3. You will need to create an account for payments to HMRC. Ensure that this is also set to NOT track non-resident landlord tax. 
  4. Create a new contact record for HMRC, making sure the Contact Category is set to Company.
  5. Setup a Disbursement Profile using the Non-Resident Withholding Tax Disbursment option, to pay Non-Resident Tax to HMRC.
  6. Once the Landlord has been setup as an Owner and their Property(ies) have been setup, set the Landlord to be Non-resident.  For an owner group, the individual members of the group need to be set as non-resident, not the owner group.
  •     Select Non-Resident Tax from the left menu within the Contact, then select the Flag as Non Resident button 
  •     The following screen will be available:
  • Enter the date that the Owner became Non-Resident in the Start Date.  
  • If they are still Non-Resident leave the end date blank, this should only be completed if the Owner becomes a UK resident again.  If an end date is entered, Tax will only be withheld for transactions upto this date.
  • If the Owner is not VAT registered, de-select this tick, this will mean that Non-Resident Landlord tax will be calculated on gross amounts.
  • If the Owner is approved for exemption, tick this box.  Re-Leased will then track the income and expenditure for the Owner for inclusion in the Annual Return to HMRC, but will not retain any tax.  The following screen will be available:
  • Complete the Exemption Approval Date and enter the Approval Reference Number.  The Exemption Withdrawn Date should be left blank while the exemption certificate is in force.
  • Save the record.
  • The following screen will be presented:
  • If you are setting up the owner part way through a tax period and your bank currently contains Tax that you are retaining, you should now enter the net amount of income (ie any income less any allowable expenses).  The system will then calculate the amount of tax retained (this should match with the amount of tax you are retaining in your bank).  To do this select Set Opening Balance and you will be presented with the following screen:
  • Select the required ledger from the drop down list if the default one is not correct. 
  • The current quarter will default in the Quarter End field.
  • In the Transaction Type field, select Taxable Income from the drop down. (If you select Deductable Expense from the dropdown the amount of tax retained will be reduced, this could be used for any adjustments you need to do at a later stage)
  • Enter a description for display on internal reports.
  • In the Account field, select the Rent Revenue chart of account code from the drop down.
  • Enter the net amount of income and you will see the Non Resident Tax Amount below calculates automatically.
  • When you are happy that the automatically calculated Non Resident Tax Amount matches the amount you are retaining in your bank account press save.
  • This will hold the tax amount in the bank ensuring it is not available to be paid over to the owner. This will only be released when the disbursement to HMRC is processed.
  • If the owner has an exemption certificate, you can set an opening balance to record the net amount of income in exactly the same way, however no tax will be automatically held, but the net income amount will be taken into consideration for your year end return to HMRC.