- Are you a landlord?
- Are you paying tax?
Amazingly it seems that vast numbers of landlords are receiving rent and not paying tax on it. For example, this report in the Guardian says that about one-half of landlords in Newham are not paying tax.
Now I don’t know about you, but I pay my tax. And being someone who pays her tax (sometimes with difficulty) I am not particularly happy about people not paying tax!
It may be I suppose that many landlords genuinely believe that their rent is not taxable (tip – it is). Although I think it is more likely that they are being ‘knowingly innocent’ and chancing their luck.
Well, if so they ought to take warning that their luck is likely to run out any time soon.
A warning to defaulting landlords
HMCR is actively hunting out landlords who don’t pay tax and cross referencing the various databases available to them.
These include Local Authority licensing schemes and tenancy deposit scheme databases. If you appear on one of these but do not appear to be paying tax on rent they will shortly be knocking on your door.
When this happens landlords will get a nasty shock. Not only will they have to pay tax on rental income for the past 20 years, they may also have to pay a penalty of up to 100% of that tax. Plus they may be the subject of a criminal investigation.
Not something you will want. However, it does not have to be like that.
The Let Property Campaign
There is a way you can disclose your earnings to HMRC now and get off considerably more lightly. This is via HMRC’s Let Property Campaign.
If you voluntarily contact HMRC under this scheme
- You will pay a lower penalty — or in some cases, you may not have to pay any penalty at all
- HMRC may not go back the whole 20 years
- You will be given time to pay
- You won’t be prosecuted (save in exceptional cases)
However, if you wait until they catch you they will have no sympathy on you and you will end up paying a lot more money.
This Blog was written by Landlord Law, find more of their blogs on their website.
You can read more about the Let Property Campaign here.
If you would like some assistance to find your perfect property/sell or let your property please contact Right Estate Agents on 0845 026 8527 or visit our website.