Landlords and property investors in the UK have been monitored for tax compliance by HM Revenue and Customs since 2013 through the Let Property Campaign.
This guide covers everything landlords need to know about their tax liability, including who should declare their rental income, how to participate in the campaign, the penalty range for not declaring rental income, how to mitigate penalties, and what to do if receiving a nudge letter from HMRC.
What is the Let Property Campaign?
The Let Property Campaign is a smart move for landlords who want to be upfront about their rental income and settle their taxes. It’s a voluntary disclosure program that helps them avoid heavy penalties from HMRC, should they discover any discrepancies.
If landlords have undeclared rental profits, they should inform HMRC at the earliest. This displays their good intentions and helps them limit the penalties. HMRC has many ways to track down landlords who haven’t disclosed their rental income. So, it’s best to be transparent and upfront.
Landlords should declare any income they haven’t reported to HMRC in previous tax years, including income tax, investment income, rental income, inheritance tax, and capital gains.
If they disclose and pay in 90 days, they can reduce their penalties. It’s always a good idea to seek professional help from tax experts or accountants to manage the penalties and resolve any undisclosed taxes.
Who is This For?
If you happen to be a landlord renting out residential properties in the UK, there is an important initiative that you should be aware of – the Let Property Campaign. This campaign has been specifically designed to assist landlords who might have inadvertently failed to pay the correct amount of tax on their rental income.
By participating in this scheme, you can ensure that you are up to date with your tax obligations and avoid any potential penalties or legal issues down the road.
If you earn more than £1,000 a year from renting out your property, you must let HMRC know. If your annual rental income exceeds £2,500, you need to register for self-assessment.
Keep in mind that the Let Property Campaign does not cover commercial landlords or trustees and directors of a company or trust. However, if you fall under any of these categories, you can request an alternative disclosure opportunity from HMRC that suits your needs.
To avoid facing penalties, it’s essential to disclose and pay taxes on your rental income within the specified time limit. The deadline varies depending on the reason for not paying the correct amount of tax. Failure to comply may result in HMRC looking back to six or even 20 years.
Final Words
In conclusion, landlords and property investors must proactively meet their tax obligations to avoid serious consequences.
The Let Property Campaign allows landlords to disclose their undeclared rental income and straighten up their tax affairs before HMRC suspects them of being tax non-compliant and makes tax investigations.
Landlords with undeclared rental profits should immediately notify HMRC and take advantage of having their penalties reduced.
