Are you a landlord who hasn't declared your rental income? You're not alone. We're seeing an increase in such cases, with mortgage companies now often requesting an income declaration proof (a SA302) from your accountant.
Here's something to remember: Even if your rental property operated at a loss, if you've collected more than £1,000 in a financial year, you must declare it.
A common pitfall many landlords stumble into is thinking that their mortgage is an allowable expense—it's not. Although you can get a 20% tax credit for the interest, it's not deductible from your rental income.
Does this sound overwhelming? Don't panic. We're here to help!
The HMRC has introduced a Let Property Campaign, a straightforward route for landlords, with residential properties either in the UK or abroad, to update their tax affairs under favourable terms.
What sets this campaign apart from previous ones is the absence of a disclosure 'window'. There's no strict deadline to declare your dues.
However, don't let this lull you into complacency. The campaign will continue for some time, but landlords who wait too long risk incurring higher penalties if they're investigated and haven't already signalled their intent to disclose.
Whether your errors were due to misunderstanding the rules or deliberately avoiding payment, it's always better to approach the HMRC and admit inaccuracies rather than waiting for them to discover your mistakes.
The Let Property Campaign provides optimal terms to set your tax affairs straight. All you have to do is notify the HMRC of your intent to participate, cooperate fully, make a comprehensive disclosure, and ensure payment.
When you make your disclosure, you can suggest what penalty you think you should pay. The amount will depend on the reason for your non-disclosure—if you've intentionally withheld information from HMRC, your penalty will be higher than if you've simply made a mistake. In some cases, you might not need to pay a penalty at all, but if you do, it'll likely be lower than if HMRC discovers that you've underpaid your tax.
If you're worried about paying a lump sum, you may have the option to spread your payments, depending on your circumstances.
As a landlord, if you have unreported income, it's crucial to inform HMRC about any unpaid tax immediately. Following this, you'll have 90 days to calculate and settle your dues.
Don't procrastinate—reach out to us today, and we'll help straighten out your tax affairs, ensuring peace of mind. [email protected]
This information is accurate as of 14th July 2023. However, bear in mind that tax laws can and do change, and certain provisions such as private residence relief may not exist in the future.
