Are you declaring all your letting income?
You may face serious penalties if you are a Landlord failing to declare your income from properties
HMRC continues to warn landlords that they face severe penalties if they fail to declare their letting income.
An analysis of HMRC data has revealed over £42 million has been recovered from landlords with undeclared rental income in 2018-19, double the £21 million recorded in 2017-18.
Throughout July and August 2018 and again in 2019, HMRC sent a huge batch of ‘Let Property Campaign’ letters to landlords and other buy-to-let investors with undeclared rental income. This wave of letters targets accidental landlords with 1 or two rental properties.
The tax authority believes that millions of buy-to-let and other private landlords are still failing to declare their income. HMRC has said that many others are artificially inflating their expenses claims to reduce their tax bill.
The campaign is aimed at landlords who have failed to declare income from renting out property as well as individuals who have incorrectly filled out their tax return. Like previous tax evasion campaigns, the taxpayer will reduce the penalty they have to pay if they come forward voluntarily but if they remain silent and are caught they could be liable for up to a 100% penalty on the tax owed.
This focus on the property market means that HMRC will be looking for anything that is out of the ordinary, even an honest mistake could prove very costly for landlords. HMRC makes mistakes, so landlords whose tax return is spot on may receive an enquiry letter if HMRC’s information is incorrect.
Landlords should do their best to submit an accurate tax return and talk to their accountant about any concerns they have before they are faced with an intrusive and costly tax investigation.