Buy to Let Landlords Facing a Crack Down From HMRC

If you are a buy to let landlord or second home owner renting out property and have yet register with HMRC you most likely have not declared any profit liable to income tax from renting your property. You should be aware that HMRC are now targeting defaulting landlords in a new crackdown on rental income that has not been declared via the self-assessment system. Even if they have not made a profit landlords are still required to register with HMRC for self –assessment purposes.

As many as 900,000 owners of rental property, holiday lets or second homes are at risk of being investigated by the taxman over claims they have not declared profits that they have made. Those caught flouting the rules face bills for the tax owed, fines and possible prosecution.

Allowable Expenses

If you own a second home and rent it out you have to pay tax on the profits you make through the self-assessment system at the end of the tax year. You can deduct expenses wholly and exclusively incurred in providing the letting. Such expenses include mortgage interest payments and other upkeep expenses. Income tax is charged on the profit at 20% for basic rate taxpayers and 40% for higher rate tax payers. . If you make a loss you can carry that forward to offset against future year profits.

Failure to Disclose

Landlords have a choice to make, either keep their head down, and hope the taxman does not come a knocking at their door or, the recommended action, bring their tax affairs up to date. HMRC are always more lenient on individuals who make a voluntary declaration. You would still have to pay any tax owing but the fines would be less onerous.

Next Step

I have many buy to let clients and so I am well placed to help you put your affairs in order and reduce your income tax liability to a minimum. If you need independent help or advice please give me a call on 07954 091981 0r email My fees are very competitive.

Posted in HMRC at 2014-07-28 by Alan Ovenden

Tags: buy-to-let, HMRC, landlord, self-assessment, tax returns