WEEKLY PROPERTY TIPS Landlords – this one is for you!Do not risk get caught by the income tax trap!
Updated: May 4
Approximately 7% of all landlords in the UK are ‘accidental’, which means they have never intended to let out a property. Reasons for being an accidental landlord could include, for example, inheriting a property that you couldn’t sell and being forced to let it out to tenants. As an accidental landlord, understanding the laws around income tax and what needs to be declared can be
complicated, confusing and, for many, it can also be somewhat of an unknown.
In addition to the accidental landlords, according to HMRC statistics, there are approximately 700,000 landlords (estimated) in the UK that have been receiving rent for a property but have not been declaring it. Thus, in 2019, the government started to invest heavily in a specialist task force to hunt for landlords who had not been declaring their rental income.
The penalties for undisclosed income can be really hefty, ranging from 15% up to 100% of the rental income in some cases. We understand that tax on rental property can be a complex area, therefore, we highly recommend to all landlords who are unsure about what is the right thing to do to seek professional guidance and assistance. For example, a specialist accountant can guide you through the rules and tax regulations and help you calculate the tax you owe, ensure any mitigating factors are correctly applied and create a plan so that the tax you owe can be settled with the minimum of fuss so that you can have peace of mind that no hefty penalties are coming your way!
To resolve these issues as smoothly as possible, the government launched a campaign for landlords who haven’t yet declared their rental income – the so called the Let Property Campaign, which is giving landlords the chance to get their tax affairs in order right now.
What is the Let Property Campaign?
Essentially, it is a government initiative which allows landlords to tell HMRC about any unpaid tax now. Landlords will then have to work out and pay what they owe with minimal penalties within 90 days. It covers landlords in the following situations:
· Landlords with multiple properties
· Landlords with single rentals
· Those with student or workforce rentals
· Holiday lets
· Those renting a room out from their main home
· Those who live abroad for more than six months and rent out a property in the UK
Although, the Let Property Campaign was launched years ago, many people are still unaware of its existence and we often have worried landlords coming to us because, for some reason, their income from a rental property hasn’t been properly declared to HMRC. Once we explain the mechanics of the Let Property Campaign to them, it really helps to understand their situation and ease the burden. There is no end date of the campaign, so it will continue running for the foreseeable future, giving landlords the chance to do the right thing by coming forward, making a disclosure, taking advantage of the best possible terms and avoiding huge tax fines.
Do the Right Thing!
We highly recommend to anyone who hasn’t declared their rental income to come forward as soon as possible so that any penalties are as minimal as possible and if you have questions, do not hesitate to seek for professional guidance and assistance!
Apart from providing you with property sales and letting services, we at VG Homes 2019 Ltd also offer Property Management service so you can always hit us up with any property-related enquiries – we take pride in being always up to date with the latest property requirements and regulations! We would love to take the hassle out of you and are committed to guide you in the right direction!
If you do not have enough time to deal with your rentals and you need someone reliable to take over, get in touch today for more information about our Property Management service and subscribe to our email newsletter to continue keep receiving our weekly property news straight into your inbox!