Landlords who fail to tell HM Revenue and Customs about all their rental income are being offered the chance to come forward and put their tax affairs straight – before HMRC comes to them.
The new Let property campaign will run for at least 18 months, says HMRC, but it appears that time could run out for some landlords well before then.
By coming forward voluntarily, landlords will receive the best possible terms. Any penalty they pay will be lower than if HMRC comes to them first – which can be up to 100% of the tax due and a possible criminal prosecution.
HMRC estimates that up to 1.5m landlords may be underpaying up to £500m in tax every year.
Under the Let Property campaign, landlords who may owe tax – whether through misunderstanding 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’s 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 a simple one – it is better to come to us before we come to you.”
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 be able to make use of the opportunity offered as a part of this campaign.