HM Revenue & Customs’ (HMRC) are using a host of resources at its disposal in order to target landlords who are not declaring their rental profits.
These techniques are providing the basis for enquiries and investigations into the tax affairs of private landlords.
However, HMRC are giving landlords the opportunity to bring their tax affairs up to date.
The Let Property Campaign
The Let Property Campaign is a chance for private landlords to submit their undeclared income before HMRC raise their enquiry.
The benefit of ‘getting there first’ is the chance to reduce any penalties due on your outstanding tax liabilities.
However, if you have received a letter from HMRC we would suggest you act quickly to avoid the possibility of criminal proceedings.
The Let Property Campaign also extends to any Capital Gains tax liabilities which arise on the sale of a property which isn’t your main residence.
The Let Property Campaign is available individuals who:
Rent out a single property
Rent out multiple properties
Rent out a room in your property
Helpful Tips To Completing your Let Property Campaign Disclosure
Calculate your tax due per year based on your rate of income tax e.g. you are earn £20k per annum from a salary and make a rental profit of £8k your tax due will be at 20%
Remember to claim all allowable expenses to reduce your profits, these include:
Repairs to the property
Agents Fees
Accountancy Fees
Property Insurance
Rates and Council tax (when the property was empty)
Service Charges and Ground rent
Travelling expenses
Mortgage Interest (can only claim 100% of mortgage interest for the tax years up to and including 5 April 2017)
Wear and Tear Allowance (can only claim wear and tear allowance for the tax years up to and including 5 April 2016)
You must declare your profits from as far back as you began renting out your profit up to 20 years.
However, if you are registered for self-assessment and have been submitting a tax return you are only required to go back as far as 6 years.
If you made rental losses during the year, you can offset these against future profits
Interest will be payable on any outstanding liabilities which have not been paid.
At Kala Atkinson, we have experience in dealing with HMRC and the Let Property Campaign. More importantly, we have the technical expertise to ensure you pay the right amount of tax interest and the minimising your penalties.
Get in touch today to find out how we can help.