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The short answer
Keep enough of the rent in naira to cover the property's own costs for the year, such as repairs, agent fees, service charges and Lagos land use charge. Convert the rest to pounds on a planned schedule rather than in one go on the day it arrives. If you are UK tax resident, the rent is generally reportable in the UK, converted at the rate when the income arose.
For many Nigerians in the UK, a flat or house in Lagos is the main asset at home. Rent arrives in naira, often as a large payment in advance, while the landlord's life runs in pounds. The question is not only whether to convert, but how much, when, and what has to be paid first.
Costs that stay in naira
Before any rent becomes pounds, set aside what the property will cost to run. These bills are all priced in naira.
- Agent or property manager's fee, and any caretaker.
- Repairs between tenancies and during them.
- Service charge in an estate, where it is the landlord's to pay.
- Lagos land use charge and other property rates; see land use charge from the UK.
- Legal and agreement costs at renewal.
Converting rent to pounds and then buying naira back for a roof repair costs you the conversion margin twice. A naira reserve avoids that.
Tax in Nigeria and in the UK
This is information, not advice. The NGEX diaspora guide hosted by NiDCOM says rent is subject to 10% withholding tax in Nigeria. A corporate tenant may deduct it before paying you; an individual tenant may not. Ask your agent which applies and keep the withholding tax receipt.
If you are UK tax resident, foreign rent is generally reported on the SA106 foreign pages. HMRC's SA106 notes for 2026 say to convert foreign income to pounds using the exchange rate at the time the income arose, and that UK and overseas property income up to £1,000 in total is exempt and need not be reported. Where Nigerian tax has been paid on the rent, foreign tax credit relief may reduce the UK tax; HMRC's HS263 helpsheet says the credit is the lower of the foreign tax and the UK tax on the same income. The detail is in UK tax on Lagos rental income and allowable costs on Nigerian rentals.
One point catches people out: your UK tax figure is fixed by the rate when the rent arose, not the rate when you later convert. If the naira weakens before you convert, you may have fewer pounds than the figure on your return.
Timing a large advance payment
Rent in Lagos is commonly paid a year or more in advance, so one payment can carry a year of exchange rate risk. Three approaches are common.
| Approach | What it does | Trade-off |
|---|---|---|
| Convert the surplus at once | Locks in the pound value on arrival | No chance to benefit if the naira strengthens |
| Convert in monthly steps | Spreads the rate risk across the year | Naira still held may lose value |
| Hold in naira for future naira plans | Avoids conversion cost entirely | Full exposure if you later need pounds |
Worked example
Example only, with assumed figures. Annual rent of ₦6,000,000 arrives in January. You set aside ₦1,200,000 for costs and withholding tax, leaving ₦4,800,000. You convert ₦400,000 each month. If the rate averages an assumed ₦2,000 per pound, that gives £200 a month, £2,400 over the year. At an assumed average of ₦2,200, it gives about £181.82 a month, £2,181.82 for the year. Converting the whole ₦4,800,000 in January at ₦2,000 would have fixed £2,400 on day one.
If the tenant pays late or in parts
Not every tenant pays the full year at once. Part payments make the conversion decision easier, because each one is smaller, but they make records harder. Log each instalment separately with its date, because for a UK resident each one is income that arose on its own date and is converted at its own rate.
If an agent collects on your behalf and pays you net of fees, ask for a statement that shows the gross rent, each deduction and the withholding tax, if any. You need the gross figure for your UK return, not only the amount that reached you.
Choosing your approach
- Do you need the rent for UK bills, or is it a long-term saving?
- Do you have naira plans at home: building, family support, a future return?
- How much of a fall in pound value can you absorb?
- Have you kept a dated record of each rent payment and its pound value for your return?
If the rent pays for family commitments at home, holding it in naira is often the simplest answer. If it pays a UK mortgage, a schedule of conversions is safer than waiting for a good day. Day-to-day handling of tenant payments is covered in receiving rent from a Nigerian tenant.
Where Pryme fits
With a Pryme account, the tenant or agent pays rent to your naira account number by local transfer, the property's costs are paid from naira, and the surplus can be converted with Swap, with the rate and fee shown before you approve. A verifiable statement, from receipts and statements, gives you a record of each rent payment that anyone can check is genuine and unaltered.
Questions people ask
Should I convert my Lagos rent to pounds straight away?
Only the part you need in pounds. Keep a naira reserve for the property's costs so you do not convert twice.
Is there withholding tax on rent in Nigeria?
The NGEX diaspora guide hosted by NiDCOM says rent is subject to 10% withholding tax. Whether it is deducted depends on the tenant.
Which exchange rate do I use for Lagos rent on my UK tax return?
HMRC's SA106 notes say to use the exchange rate at the time the income arose, and link to HMRC's published rates.
Can I claim the Nigerian tax on my rent against UK tax?
Foreign tax credit relief may apply. HMRC's HS263 says the credit is the lower of the foreign tax and the UK tax on the same income.
Sources
- NGEX Diaspora Guide to Nigeria's 2026 tax reforms, hosted by NiDCOM (Dec 2025/Jan 2026) · accessed Oct 2026
- SA106 Notes 2026: Foreign, tax year 2025 to 2026, HMRC · accessed Oct 2026
- Relief for foreign tax paid 2026 (HS263), HMRC (updated 6 April 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.