Tax avoidance’s a continuous point of interest for HM Revenue & Customs (HMRC). In the digital world we live in, where it’s become normal to expose our personal details online, combined with HMRC’s increasing powers to inspect your personal affairs online, it’s now even easier for them to find undeclared income. The ‘Let Property Campaign’ is an opportunity for property owners who owe undisclosed income tax from letting out residential property, in the UK or abroad, to correct their tax affairs.
If you yourself are a landlord, or you know someone who is, then read on….
The rules for when individuals must complete a tax return based on their property income aren’t completely black and white, and this is catching some of our clients out. The ‘Let Property Campaign’ encourages landlords to come forward and notify HMRC of all previously undisclosed income and pay the tax liability due. If you have any of the following income sources, then please get in touch, as it may be that we can help you:
The ‘Let Property Campaign’ includes:
– Those who have multiple properties.
– Landlords with single rentals.
– Specialist landlords with student or workforce rentals.
– Holiday lettings.
– Renting out a room in your main home for more than the ‘Rent a Room Scheme’ threshold.
– Those who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK, as they may still be liable to pay UK taxes.
HMRC’s already started writing to people they’ve reason to believe are landlords, asking them to take part in the Campaign. You’ll have 30 days to contact HMRC from the date you receive the letter and notify them if you’re receiving rental income. Once you’ve notified them you’re a landlord, you’ll have 3 months to then declare to them your rental income, expenses and any income tax liability due.
And the benefit of disclosing your rental income to HMRC? They’re offering reduced penalties for people who’ve helped them based on the accuracy of the information provided. If you choose to disclose your rental income, then the maximum penalty will be 20% of the tax due. However, if you wait until HMRC find the undisclosed income, then you could be looking at penalties as high as 70%, whilst in severe cases, it could be even more.
If HMRC finds out at a later date you’re behind with your tax, it may be harder to convince them that not disclosing the income was a mistake. The law allows HMRC to go back up to 20 years if you’ve deliberately not declared income and they’ll recover the tax due on all income received, plus interest and penalties, which with penalties up to 70%, there could be a large tax bill to pay.
If you receive rental income you aren’t currently declaring on your tax return, then don’t hesitate to contact Hannah Barrett, Private Client Semi-Senior on firstname.lastname@example.org or 01604 483513.
Want to know more? Call us on 01604 746760 or email email@example.com