When people leave the UK it is common for them to rent out their home for many reasons. However, this Letting income is a new source of income and it must be notified to HMRC. Failure to notify HMRC of this liability within six months after the end of the tax year for income tax may result in a penalty up to the maximum of the tax that was due.
In practical terms this means that if you have tax to pay on this new source of income you must tell HMRC before 5 October following the tax year end. However, if no tax is due then nothing adverse can happen.
When you leave the UK you are still entitled to your UK tax free personal allowance, this means that your Gross rents less expenses and any mortgage interest may leave a rent close or less than your tax free personal allowance in which case little or no tax would actually be payable.
The problem is that HMRC expect you to draw up your Letting accounts each year according to their tax rules in order for you to declare it to them, in order that they can confirm what if any tax is due.
As a non-resident landlord there is additional law that requires a Tenant or a Letting Agent to withhold basic rate tax from the Net rental payments to you unless you have applied and been approved to join the non-residents landlord (NRL) scheme.
You can download a copy of the NRL application form from this web page with additional details:
http://www.hmrc.gov.uk/cnr/nr_landlords.htm
As a landlord there are additional regulatory considerations best reviewed in this helpful website:
http://www.landlordzone.co.uk/regulations.htm
At the same time as leaving the UK you should complete the P85 tax form to state that you have left the UK and on what basis.
http://www.hmrc.gov.uk/cnr/p85.pdf
Ideally you should leave the UK for full time employment or self-employment abroad and that your visits back to the UK will be small ie less than 91 days each tax year and that your employment or self-employment and your absence abroad will last for more than one UK tax year.
If you read this paragraph in the context of the questions on the P85 tax form you'll see how this fits in. The reason for this wording is to safely secure a non-residence and non-ordinarily residence status which ensures your foreign income is not taxable in the UK leaving your tax free personal allowances and tax bands available for your UK source income only.
