When using the bulk payment system, non-resident landlords can be set up to have withholding tax calculated and deducted when you click Deduct all withholding tax from Lettings properties > Property balances.

These funds are held in the Withholding tax balance until you are ready to pay them to HMRC. You can access a ledger of withholding tax transactions from Bank > Withholding tax.

NOTE: Should you choose not to use the bulk payment system, you will need to add withholding tax deductions manually as landlord deductions.

NOTE: For specific details or advice on NRL/Withholding tax, please see HMRC guidance.

1. Enabling withholding tax deductions

Using the bulk payment system, you can set up automatic withholding tax deductions or enter exemption details if required. This can be done from the landlord record.

NOTE: Withholding tax is calculated on an individual basis. When you have multiple non-resident property owners, each landlord record must be updated.

Go to Owners > View owners (landlords)
Click on the pencil icon for the relevant landlord
Click to Disable read only mode at the top of the tab
Set the Residency to Abroad
Enter the NRL number if required for exemptions
Switch automatic deductions on/off by ticking or un-ticking Deduct withholding tax
Click Update landlord

2. Calculating and paying withholding tax to HMRC

Go to Admin > Exports and click Annual withholding tax
Select the relevant period and click Go to download an export with the details required to complete a withholding tax report for HMRC
Calculate the total withholding tax you need to pay (the total withholding tax gathered over the selected period)
Pay this total to HMRC by bank transfer

3. Assigning cleared transactions to HMRC

When you import the bank line showing the HMRC payment, you will find the transaction in Financials > Unassigned lines. The payment can be split into separate lines per property assigned as category = the relevant property and subcategory = Withholding tax to HMRC.

4. Deleting/refunding incorrectly charged withholding tax

4.1 Deleting the deduction

You can delete a withholding tax deduction added in error by going to Financials > Landlord deductions and clicking the X under the delete column for the relevant deduction (you may need to check the Closed Items from the top left to find your deduction).

NOTE: You can only do this when the landlord has not had a payment or statement with the deduction present on their balance. In cases where this has happened, you must refund the money via a clawback or manual refund instead of deleting the deduction (see options below).

4.2 Clawing back the deduction

In cases where the landlord has already received a payment and statement with the withholding tax deducted, you will need to click Clawback instead of deleting. This will refund the deduction to the landlord's balance.