Let Property Campaign
HM Revenue and Customs (HMRC) have introduced a new campaign which enables landlords who may owe tax on rental income to get their tax affairs up to date without incurring large penalties for non-payment. The Let Property Campaign is for individual landlords who rent out residential property either in the UK or abroad.
Landlords who think they may owe tax on previously undisclosed rental income must make a voluntary disclosure to HMRC to benefit from the most advantageous payment terms. This is done by filling out a special form and once submitted to HMRC there will be a 3 month period allowed in which to calculate and pay the amount owing.
The Let Property Campaign is only for individual landlords renting out residential property, which includes houses, flats and houseboats but not garages, guest houses or B&Bs. It does not include individuals renting out commercial premises, such as offices or shops, nor companies and trusts renting out residential property.
The scheme includes landlords with just one property or those with a portfolio of multiple properties and also those living overseas and letting a UK property or, conversely, those living in the UK and letting a property overseas. Holiday homes both in the UK and abroad can also be liable for tax on rental income even if you use it for your own holidays.
Note that if you rent out a room in your own house you may also be liable for tax on the income if it exceeds a certain threshold (currently £4,250/annum or £2,125 if the property is owned jointly).
Let Property Campaign is an opportunity…
HMRC recognises that some landlords may not have been aware of their obligation to pay tax on certain income or may not have paid the correct amount so the Let Property Campaign is an opportunity to rectify the situation.
Common areas of misunderstanding of tax liabilities include:
- Only the interest element of a mortgage can be offset against tax, not any capital repayments.
- Occasionally letting out your own holiday home.
- Inheriting a property and letting it out.
- Parents buying a flat for their student child, who pays no rent, but friends who flat-share do pay rent to the parents.
- Relocating abroad and temporarily renting out your home to a family friend.
There are many other situations where you may be liable for unpaid taxes or have not paid the correct amount of tax on rental income.
HMRC is able to identify individuals who may own more than one property by using a variety of information. They can view Land Registry data and information from mortgage lenders as well as letting agents.
We offer guidance on making a disclosure under this current campaign to help minimise your tax liability. The Let Property Campaign is your chance to set your tax affairs in order. If you do not voluntarily disclose unpaid taxes now you could face higher penalties in the future.
Call our tax advisors today on 020 8458 8727