Raffingers' tax team, which includes ex HMRC staff, are extremely experienced in dealing with tax issues involving making disclosures to HMRC using The Let Property Campaign, as our Tax Partner, Neill Staff explains.
There isn’t a week goes by without me getting a call from someone about the Let Property Campaign. I think that by now, everyone knows that HMRC has details of all property transactions dating back many years, and if you’ve been receiving rental income and haven’t declared it, then it is simply a matter of time before you receive a letter from HMRC. Of course, there are many reasons why rental income doesn’t get reported, and one of the more common reasons I hear is that people don’t think they are making a profit. A typical example is that the mortgage payments and expenses are higher than the rent received, so people assume there is no profit. Unfortunately, tax doesn’t work that way and you only get tax relief for the mortgage interest, not the capital repayment.
I have also found that people are sometimes not aware that, regardless of whether they make a profit or not, rental income needs to be declared to HMRC and the person should have registered for self-assessment and declared the profit (or loss) on their tax return.
My advice to anyone who thinks they may have under-declared or not declared their rental income is to consider using the Let Property Campaign. It gives people an opportunity to bring their tax affairs up to date if they are an individual landlord letting out residential property in the UK or abroad, and to get the best possible terms to pay the tax they owe. The procedure is very simple in that you register for the scheme, and you then have 90 days to calculate and pay what you owe. In certain circumstances I have seen HMRC give time to pay.
Who can do this?
You can report previously undisclosed taxes on rental income to HMRC under the Let Property Campaign if you’re an individual landlord renting out residential property.
This includes you if you’re:
- renting out a single property
- renting out multiple properties
- a specialist landlord, eg student or workforce rentals
- renting out a room in your main home for more than the Rent a Room Scheme threshold
- living abroad and renting out a property in the UK
- living in the UK and renting a property abroad
- renting out a holiday home even if you use it yourself
You can’t use this scheme to declare undisclosed income if you’re a company or a trust renting out residential property or if you’re renting out commercial property.
Unlike many historic HMRC campaigns, the Let Property Campaign has not got a date by which HMRC will close it, so it is available for the foreseeable future. It is also worth noting that the campaign is not just about putting an individual's tax affairs right relating to the rental income. There does have to be rental income to take part in the Let Property Campaign, but the campaign should also declare any other undisclosed income. So if someone who is self-employed has also not declared all of their income from self-employment, they should use the Let Property Campaign to disclose and correct all of their tax affairs.
The Let Property Campaign really is something that people should be considering. HMRC also obtain information regarding housing benefit, or from letting agents and local authorities (HMRC have the legal power to force local authorities or letting agents to provide this information) and HMRC will write to the individual to whom the rent is paid and invite them to take part in the campaign.
If you have not declared or under declared rental income, contact neill.staff@raffingers.co.uk who will be happy to advise you.