Landlords - HMRC is closing in on undeclared letting income!
When you start renting out property, you must tell HM Revenue and Customs (HMRC) and you may have to pay tax. You must report income from property rental of more than £2,500 a year on a Self Assessment tax return.
Landlords who have failed to delcare their rental earnings to HMRC are being warned to pay up or face higher penalties. The Revenue is targeting widespread tax evasion on property lettings, and estimates that one million buy-to-let and other private landlords are not declaring their rental income, therefore underpaying up to £500 million tax every year. Under the Revenue's Let Property Campaign, landlords who may owe tax, whether through deliberate evasion or misunderstanding the rules, can come forward and declare any unpaid tax, although they will have to pay possible penalties and interest.
Under paragraph 18 of schedule 23 to the finance act 2011, Lettings Agents are now required by law to provide information on Landlords rental income to HMRC. HMRC will use the information provided to check that landlords declare the rents on their tax returns. So if your tax affairs are not up to date and you owe tax on your letting income, you now have the opportunity to make a voluntary disclosure via HMRC's Let Property Campaign helpline on 03000 514 479. Landlords who do so will have three months to calculate and pay what they owe and will receive the best possible terms. If they do not they could face hefty fines or even criminal prosecution.