TL;DR
- UK rental income is taxable in the UK even if you live in Dubai. Non-residents pay Income Tax at 20%, 40%, or 45% on net rental profits after allowable expensesUK tax applies
- The Non-Resident Landlord Scheme (NRLS) requires your letting agent or tenant to deduct 20% tax at source unless you apply to HMRC to receive rent gross using form NRL1NRLS registration
- Allowable deductions include agent fees, repairs, insurance, and mortgage interest relief at 20%. You keep the personal allowance (£12,570) unless income exceeds £100k£12,570 allowance
- Self-Assessment deadline is 31 January each year. Capital gains on UK residential property must be reported within 60 days of completion. Late filing attracts immediate penalties31 Jan deadline
💡Quick reference summary. Continue reading for comprehensive analysis and context.
Moving to Dubai is one of the most common ways UK entrepreneurs and business owners restructure their tax affairs. But there is one thing Dubai residency cannot change: your liability to UK tax on UK rental income.
UK rental income is taxable in the UK regardless of where you live. Whether you own one flat in London or a portfolio of properties across the country, HMRC wants to hear from you every year.
This guide explains the Non-Resident Landlord Scheme, what you can deduct, the tax rates that apply, Self-Assessment filing obligations, and what happens when you eventually sell.
Part of our Dubai expat series
This article covers UK rental income for Dubai-based landlords. For the broader picture, read our UK Expat Accountant Dubai page and our Statutory Residence Test guide. See also: UAE Corporate Tax Guide.
Does Moving to Dubai Remove UK Tax on Rental Income?
No. This is the most common misconception for Dubai-based UK expats. Non-UK residents still pay UK Income Tax on UK-source income. Rental income from UK property is UK-source income. There is no way around this.
What Dubai residency does remove is UK tax on:
- Your UAE employment or business income
- Dividends from your UAE company
- Most overseas income (subject to the Statutory Residence Test)
But your UK property sits outside Dubai. It generates UK-source income. That income is taxed in the UK at UK Income Tax rates. The only variables are how much tax you pay and how it is collected.
The UK-UAE Double Taxation Agreement
The UK-UAE DTA covers rental income under Article 6 (Income from Immovable Property). The DTA gives the UK the primary right to tax income from UK-situated property.
Since the UAE has no personal income tax, there is no double taxation issue in practice. You pay UK tax on your rental income. You pay nothing in the UAE on that same income. No credit needed.
What Is the Non-Resident Landlord Scheme?
The Non-Resident Landlord Scheme (NRLS) is HMRC's mechanism for collecting tax from overseas landlords. If you are absent from the UK for six months or more in a tax year, you are treated as a non-resident landlord for NRLS purposes.
Under the NRLS, your letting agent (or tenant, if you manage directly) is required to:
- Deduct 20% basic rate tax from your rental income each quarter
- Pay the withheld tax to HMRC
- File quarterly NRLS returns with HMRC
- Provide you with an annual certificate showing tax deducted
This deduction happens before you receive your rent. If your letting agent collects £2,000 per month and you are on the NRLS, you receive £1,600. Your agent sends £400 to HMRC every quarter on your behalf.
Applying to receive rent gross
You can apply to HMRC to receive your full rental income without the 20% deduction. This is done using form NRL1 (for individuals). HMRC will approve your application if your UK tax affairs are up to date.
Once approved, HMRC sends an approval notice to your letting agent. Your agent then pays you the full rent. You are responsible for paying the tax owed through your annual Self-Assessment return.
Should you apply to receive rent gross?
Receiving rent gross is often preferable for cashflow. The 20% at source is just a withholding mechanism, not your final tax liability. When you file your Self-Assessment return, you reconcile your actual tax owed against the amount withheld.
If your rental profits are modest and you have significant expenses, you may owe less than 20%. Receiving gross rent avoids the overpayment cycle. But it requires you to budget carefully for the January tax bill.
What Tax Rates Apply to UK Rental Income?
Non-resident landlords pay UK Income Tax at the same rates as UK residents. For the 2025/26 tax year:
| Taxable Income Band | Rate | Notes |
|---|---|---|
| Up to £12,570 | 0% | Personal allowance (may be restricted above £100k) |
| £12,571 to £50,270 | 20% | Basic rate |
| £50,271 to £125,140 | 40% | Higher rate |
| Above £125,140 | 45% | Additional rate |
The rates apply to your total UK income, not just your rental profits. If you have other UK-source income (pension withdrawals, dividends from a UK company, interest), it all stacks up in the same rate bands.
As a non-resident, you still get the personal allowance of £12,570 for 2025/26, unless your total UK income exceeds £100,000, at which point the allowance tapers at £1 for every £2 of income above the threshold.
Worked example: rental income only
This assumes no other UK income. Where rental income stacks with other UK-source income, higher rates apply to the excess.
What Expenses Can You Deduct Against Rental Income?
You can deduct revenue expenses incurred wholly and exclusively for the purpose of renting the property. These reduce your net rental profit before tax is calculated.
Allowable deductions
Letting agent fees and management costs
Your agent's commission (typically 8-15% of rent) and any property management fees are fully deductible. This is usually the largest single expense for Dubai-based landlords.
Repairs and maintenance
Costs of keeping the property in its existing condition: fixing a boiler, repainting, replacing a broken window. Not capital improvements (like adding a new bathroom or extension).
Buildings and contents insurance
Landlord insurance premiums, including buildings cover, liability insurance, and rent guarantee insurance.
Ground rent and service charges
For leasehold properties: ground rent and service charge payments to the freeholder or management company.
Council tax and utilities
Only deductible for periods when the property is empty between tenancies (if you are paying these costs yourself).
Accountancy and professional fees
The cost of an accountant preparing your rental income tax return is deductible. Legal fees for tenancy renewals are also allowable.
Mortgage interest relief (restricted)
Mortgage interest is no longer fully deductible. Instead, you get a 20% tax credit on finance costs. See the section below for detail.
What you cannot deduct
Capital improvements
Converting a loft, adding a conservatory, or refitting a kitchen counts as capital expenditure. Not deductible against income tax. Can be used to reduce Capital Gains Tax when you sell.
Your own time
You cannot charge for your own time managing the property. Only fees paid to third-party agents or managers are deductible.
Private expenses
Any portion of an expense that relates to private use (for example, if you sometimes stay at the property yourself) must be excluded.
How Does Mortgage Interest Relief Work?
Since April 2020, landlords can no longer deduct mortgage interest from rental income directly. Instead, you get a tax credit worth 20% of your finance costs. This is known as the finance cost restriction (or Section 24).
What this means in practice:
- Your rental profit is calculated without deducting mortgage interest
- Tax is calculated on the higher profit figure
- A 20% credit is then applied to reduce your tax bill
For basic rate taxpayers, the net effect is broadly the same as before. For higher rate taxpayers, you effectively pay 40% tax on income that previously sheltered behind deductible interest.
Example: mortgage interest for a higher rate taxpayer
Old rules (pre-2020)
Current rules (Section 24)
Higher rate taxpayers pay £800 more per year on £8,000 of mortgage interest. The impact scales with the size of the mortgage and your tax rate.
UK Self-Assessment: Filing from Dubai
If you have UK rental income, you must file a UK Self-Assessment tax return every year, even as a Dubai resident. There are no exceptions for non-residents with UK property income.
Key deadlines
| Deadline | Date | Penalty for missing |
|---|---|---|
| Register for Self-Assessment | 5 October following the tax year | Penalty for late registration |
| Online tax return filing | 31 January following the tax year | £100 immediate, then increasing |
| Tax payment (balancing) | 31 January following the tax year | Interest + 5% surcharge after 30 days |
| Payment on account | 31 January and 31 July | Interest on late payment |
The tax year in the UK runs from 6 April to 5 April. For the 2025/26 tax year (6 April 2025 to 5 April 2026), your Self-Assessment return is due by 31 January 2027.
Note that HMRC operates a payments on account system. If your tax bill exceeds £1,000, you make two advance payments (50% each) in January and July of the following year, based on the prior year's tax bill. These are then reconciled against your actual tax owed in the next return.
Already renting without filing?
If you have been receiving UK rental income without filing a Self-Assessment return, you need to come forward to HMRC. The penalty regime for deliberate non-disclosure is significant, and interest accrues on unpaid tax from the original due date.
Making a voluntary disclosure before HMRC contacts you results in lower penalties. We can help you file the outstanding returns and negotiate with HMRC.
Capital Gains Tax on UK Property from Dubai
When you sell UK residential property as a non-resident, Capital Gains Tax applies to the gain. There is no exemption for non-residents on UK property.
CGT rates for residential property
From October 2024 (Autumn Budget 2024), the CGT rates on residential property are:
- 18% for gains within the basic rate band
- 24% for gains in the higher rate band
You still get the annual CGT exemption of £3,000 (2025/26). This reduces your taxable gain before rates apply.
Reporting deadline: 60 days
This is where many Dubai-based landlords are caught out. Non-residents selling UK property must report the disposal and pay any CGT due to HMRC within 60 days of completion. This applies even if you have not yet filed your annual Self-Assessment return.
You do this through HMRC's UK Property Reporting Service. Missing the 60-day deadline triggers automatic penalties from day one.
The 5-year temporary non-residence rule
If you sell assets while non-resident and then return to the UK within five complete tax years, gains realised during non-residence may be taxed in the year you return. This is called the temporary non-residence rule.
For rental property, this is less of a concern because CGT already applies to UK residential property for non-residents. But it matters for other assets: if you sell shares or other investments while in Dubai and return to the UK within 5 years, those gains can be brought back into charge.
Read more about this in our Statutory Residence Test guide.
CGT worked example: selling a UK flat from Dubai
Due to HMRC within 60 days of completion. Any overpayment or underpayment is corrected through the annual Self-Assessment return.
Practical Checklist for Dubai-Based UK Landlords
Register under the NRLS or apply for gross payment
Tell HMRC you are a non-resident landlord. If you want to receive rent without 20% deducted, apply using form NRL1 (or NRL1-I for individuals). Do this before you leave or as soon as you arrive in Dubai.
Register for Self-Assessment
If you are not already registered, do so by 5 October following the first tax year in which you had UK rental income. You will receive a Unique Taxpayer Reference (UTR) to use when filing.
Keep records of all income and expenses
Maintain a simple spreadsheet: rent received each month, agent fees, insurance premiums, repair invoices, mortgage statements. You will need these when preparing your tax return.
File your Self-Assessment return by 31 January
Report gross rental income, deduct allowable expenses, calculate net profit, and apply mortgage interest relief as a tax credit. Pay any balance owed by the same date.
Report property sales within 60 days
If you sell UK residential property, report through HMRC's UK Property Reporting Service within 60 days of completion. Do not wait for your annual return.
Review your position annually
Your tax position can change. Rental income varies, mortgage rates change, expenses fluctuate. Review with your accountant each year to make sure the position is correct and you are not overpaying.
Frequently Asked Questions
Do I pay UK tax on rental income if I live in Dubai?
What is the Non-Resident Landlord Scheme and how does it work?
Can I still claim the personal allowance as a non-resident landlord?
What is the 60-day CGT reporting rule for non-residents?
Can I deduct my mortgage payments from UK rental income?
What happens if I have not been filing Self-Assessment for my rental income?
Found this helpful? Share it.