-- income from land _ non-residents are subject to income tax at the basic and higher rate, with a system of basic rate deduction at source by tenants or letting agents;-- earned income from trade, profession or employment _ non-residents are subject to income tax at the basic and higher rate, with enforcement of tax by assessment against UK agents;-- other investment in come, such as dividends and bank interest _ tax is limited to that deducted at source.INCOME FROM LAND IN THE UKWith effect from 6 April 1996 the new deduction at source code applies.

Non-resident landlords may apply to the Financial Intermediaries and Claims Office in Bootle for approval for rent to be paid without any deduction at source.Where the non-resident landlord has been approved for self-assessment, the Revenue will authorise the landlord's letting agent not to deduct tax at source.

If there is no such approval, the landlord's letting agent will have to deduct basic rate tax from all property income, net of certain allowable expenses, with quarterly accounting to the Revenue.Full details for end-of-year returns and guidance notes for agents will be issued by the Revenue.Agents will be required to apply for registration with the Revenue within 30 days of starting to act for the non-resident landlord.

Interest paid on borrowings will not be a permissible deduction for these purposes.

A landlord will only be able to obtain an interest deduction against rental income by registering for self-assessment prior to the rent being paid, or by subsequently filing a return and self-assessment and claiming a refund.

Given that individual non-residents will be liable to both the basic and higher rates of income tax, there could well be an incentive for UK property to be held via offshore companies.NON-RESIDENTS TRADING IN THE UKNon-residents trading in the UK are subject to tax under sched D, case I in the normal way.

A person is regarded as trading in the UK if the economic activities from which the profits are derived are carried on in the UK.Where a non-resident trades both in the UK and abroad, the charge is imposed on the profits derived from that part of the trade carried on in the UK.RESPONSIBILITY OF AGENTSNew statutory provisions are introduced to formalise the responsibilities of non-residents' agents.The UK branch or agent of a trading non-resident is made jointly responsible with the non-resident for all tax matters.

From 1996/97 such a branch or agency is designated as the non-resident's UK representative for tax purposes in relation to trading and certain other income generated by the branch or agency, and capital gains on assets used in the trade.In the case of a UK partnership business with non-resident partners, whether a trade or profession, the UK resident partners are treated as the UK representative and are made liable for the non-resident's tax liability.There are exclusions for agents in other categories: those who do not carry on the regular agency of the non-resident and those who are brokers or investment managers.An area of particular importance for solicitors concerns property income and the liability of letting agents.

The regulations specifically exclude persons who only provide legal advice or legal services.The Revenue has indicated in its tax bulletin of December 1995 that this exclusion covers solicitors who take proceedings to recover arrears of rent or who receive apportioned rents in the course of a conveyance.

But the exclusion does not cover solicitors who draw up a lease and collect the first payment of rent on behalf of the landlord.

Apparently this is because, in accepting rents, the solicitor is considered to be going beyond the provision of legal advice or services.These issues are being taken up by the Law Society with the Revenue.

But, given the extensive reporting and potential tax liability of UK representatives, solicitors will need to be mindful of the new p rovisions whenever they are acting for non-residents, whether property owners or those engaged in trading transactions in the UK.INVESTMENT INCOMEUnder the present system, non-residents can be assessed to basic rate tax, and individuals to higher rate tax, on UK source investment income.

In practice the imposition of tax has largely been restricted to tax deducted at source and, under self- assessment, statutory effect is given to this present de facto position.

Interest and other income falling within sched D, case III, dividends and certain other categories of income are designated 'excluded income' and are only taxable in the hands of a non-resident individual to the extent that tax has been deducted at source.