Did you know about the Let Property Campaign? It is a vital lifeline for landlords who may not have realised that tax is due on rental income from their second property ...
If you are an accidental landlord, then you've got a second property as a result of moving in with a partner, inheriting a house from the estate of a loved one or maybe bought it for a child who pays you rent.
If you're someone who's been used to PAYE all your life, then it's just a case of being a bit naive and not realising tax was due. It could also have been because you thought your letting agent was dealing with it all or that the income was so small because you were renting to a family member or a close friend, you didn't think that you were earning enough to need to pay tax on it.
Up until 2013, there were only two options available once you realised you'd failed to pay tax on the rental fees for that second property:
- Hope HMRC never found out
- Admit it to HMRC and hope for the best
If you were lucky, you'd convince them you were acting in good faith.
Of course, you'd get a potentially massive bill for a number of years' worth of underpayments, and a penalty to boot. Often this amounted to more than 100% of the total amount owed. Thankfully, along came the Let Property Campaign.
When HMRC realised they were losing up to £500 million a year in tax from over 1.5m accidental landlords who weren't declaring their rental incomes, they realised that, in most cases, it was a genuine mistake.
The Let Property Campaign was launched in 2013 and showed landlords their own errors by using real-world case studies. Secondly, it offered to reduce, or even cancel, penalties, allowing the accidental landlords to negotiate manageable agreements for catching up on missed tax.
I strongly advise anyone who feels they need to disclose their rental income to HMRC to get their property tax affairs in order. Firstly, notify HMRC in your interest in using the Let Property Campaign then within 90-days, let them know of all undeclared income, gains, tax and duties you owe. Then pay it as soon as possible.
As you could imagine, HMRC is incredibly busy these days thanks to all the support schemes during the Coronavirus pandemic, so make use of the Let Property Campaign while they are likely to sign-off and move on to more important things.
If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.