Date posted: 24th Jul 2023
HMRC could be handed details of landlords who are not complying with their tax obligations.
The new Renters Reform Bill will include a landlord database, which is likely to have information that HMRC can access and interrogate. Therefore HMRC will be able to identify landlords who have not declared income from rental properties owned.
Anyone that rents a property, should be declaring the income, regardless of whether they make a profit or a loss. Many landlords have historically considered that only a profit needs to be declared but had also mis-understood that only the interest element of any mortgage payment is subject to tax relief and had therefore erred when working out their profit as they had simply deducted the entire mortgage payment, including the capital element of the repayment.
It is advisable for any landlords that have not declared their income, to seek professional tax advice, as coming forward without a prompt from HMRC can lower any penalties charged for non-compliance. Given that HMRC now have another way to check access information on UK landlords, it is advisable to come forward before HMRC ask the question.
As property tax experts, we have helped many new clients declare historic rental income and negotiate with HMRC in respect of penalties payable. If you need any advice, please give us a call.