Landlords face HMRC crackdown

Landlords face HMRC crackdown

Landlords are being warned that the HMRC are looking to crack down on those who don’t pay enough tax. It’s easy even for conscientious landlords to sometimes fail to pay their dues, especially as tax affairs can complex and difficult to manage. But with HMRC targeting landlords now is a good time to make sure you’re paying enough.

Self-assessment

According to Exaro, around 1 million landlords in the UK don’t declare their rental income to HMRC. Many of these landlords may simply not be making enough money on their properties to pay tax, and so don’t register for self-assessment. ‘Accidental’ landlords in particular often don’t make any money, or even make a loss. If you’re one of them, you should register for self-assessment, even if you know you won’t be liable for tax. The HMRC are warning that they will start investigating landlords who appear to be trying to dodge tax. Better to fill out a self-assessment form once a year than be investigated!

If you’re already registered for self-assessment, make sure you declare all your income and outgoings. It helps to keep a record of everything as you go, and to keep receipts properly filed. This will help you fill out your tax return, and may well save you money. Most of your expenses can be offset to reduce your tax liability, from letting agents’ fees and landlords insurance, to plumbing costs and wear and tear. It helps to get an accountant to do your tax return for you. This shouldn’t cost more than £200, but may save you much more than that.

Property sales tax

As well as looking to crack down on landlords not declaring rental income, the HMRC is launching a campaign to make sure people are paying tax on sales of second homes. Profits made when selling any property that is not the seller’s main home are liable for tax. If you’ve sold a property but are not sure if you’ve paid the right tax on the profits, it’s worth contacting HMRC now for advice. You have until 6th September to pay tax due: after that the HMRC will start investigating those they believe haven’t paid tax.

Tax affairs can be complicated and difficult. Many of us put off dealing with them as a result. But it’s worth making sure you do deal with them to avoid a much more complicated and difficult HMRC investigation.