Tax opportunity for landlords to put house in order

Landlords who rent out residential property, and fail to tell HM Revenue and Customs (HMRC) about all the rental income, are being offered the chance to come forward and put their tax affairs straight – before HMRC comes to them. 

HMRC estimates that up to 1.5 million landlords in this sector may be underpaying up to £500 million in UK tax every year.

Under HMRC’s new Let Property Campaign, landlords who may owe tax – whether through misunderstanding the rules or deliberate evasion – can come forward and tell HMRC about any unpaid tax on rents, and pay what they owe, including any penalties and interest due.

The campaign is open to all residential property landlords – from those that have multiple properties, to single rentals, and from specialist landlords such as student or workforce rentals, to holiday lettings. HMRC will be working with a variety of bodies over the next few months to develop tools and guidance to support landlords of all types and help them get their affairs up to date.

Marian Wilson, Head of HMRC Campaigns, said:

“All rent from letting out a residential property or holiday home has to be declared for income tax purposes. Telling us is simple and straightforward.

“We appreciate some people will have made honest mistakes, and some may not be fully aware that the rent from a property is taxable, and that is why it always makes sense to talk to us so we can help. It is always cheaper to come forward voluntarily and pay the tax you owe, rather than wait for HMRC to come calling.

“Telling HMRC about your tax liabilities is simple and straightforward, and help, advice and support are available. The message for all landlords owing tax is simple – it is better to come to us before we come to you.”

HMRC will use information it holds about property rental in the UK and abroad, along with information already held on HMRC‘s digital intelligence system Connect, to identify people who have not paid what they owe. For those that fail to come forward, higher penalties – or even criminal prosecution – could follow.

For more details, visit HMRC’s website.

More help is available for landlords by calling HMRC’s Let Property Campaign Hotline on 03000 514 479, between 9am and 5pm, Monday to Friday.

Notes for editors

1.  Since 2007, HMRC campaigns have collected over £552 million in tax from people coming forward, and over £224 million from a large number of follow-up activities. There are a number of criminal investigations underway and seven people have been convicted already, with custodial sentences handed out of up-to-two years. Those convicted have, between them, had to pay over £550,000.

2.  The Let Property Campaign is aimed at a large group of customers and will be running for at least 18 months. In a departure from previous campaigns, the opportunity to come forward voluntarily will remain open throughout the period of the campaign to ensure as many people as possible have a chance to come forward.

3.  HMRC will step up targeted compliance activity across all landlord types once information and support tools are in place for landlords. From next year, any landlord who may not have declared all their rental income may be contacted by HMRC. They will not then be able to make use of the opportunity offered as part of this campaign.

4.  By coming forward voluntarily, people will receive the best possible terms. Any penalty they pay by coming forward voluntarily will be lower than if HMRC comes to them first –  which can be up to 100 per cent of the tax due and a possible criminal prosecution.

5.  HMRC is currently running the second stage of its evasion publicity campaign through a series of targeted advertisements, including radio advertising and over 3,000 billboards in public areas. The campaign works alongside existing compliance activity such as data collection, taskforces and enforcement to raise awareness among those breaking the rules that HMRC is closing in on undeclared income.

6.  HMRC has recently launched four new taskforces looking at the hidden economy, hidden wealth, the security industry and the construction industry in various areas of the UK. See HMRC news release - Tax crackdown for security industry.