Methods HMRC Uses To Find Out About Rental Properties
They are quite determined ...
Posted by Helen Beaumont on 19/08/2020 @ 8:00AM
One of the commonest questions I get asked about rental properties is how HMRC will discover a new landlord's income from their rental properties. Seriously, how will they know if the income isn't declared?
If you're wondering if HMRC will find out about your rental income, they will!
copyright: chingchingsaewu / 123rf
HMRC has a number of tools at their disposal, including some seriously clever computer systems connected to the UK's public databases. These include the Land Registry and the Electoral Roll.
"Not to mention their connections abroad!"
In addition, they run regular 'tip off' campaigns with individuals getting financial rewards when tax revenue is recovered. They even have 'honesty' schemes, where no, or at least limited, penalties are applied to those coming forward voluntarily.
One thing HMRC has done recently is demanding letting agents forward them the details of the landlords they represent who are in receipt of rental incomes. This means that a great number of undeclared landlords around the country will soon receive a brown envelope on their doormat, enquiring about their income.
However, landlords can preempt HMRC doing this by using the Let Property Campaign, which is one of their honesty programs. If a landlord were to come forward and make a disclosure using the LPC then HMRC would be lenient, with typical penalties of 10% of the tax due.
"If HMRC gets in touch, then the penalties start at 15% and go all the way up to 100%!"
The Let Property Campaign has been round for a while, but can be withdrawn at any time, so if you are worried about the income from your rental properties, I suggest we have a conversation to discover how you can make your declaration.
Remember, a number of reliefs are being phased out so useful reliefs like Mortgage Interest Relief will soon be removed from any tax calculations. It's always a great idea to get professional tax advice when trying to work out what you owe on your rental properties.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about declaring the tax due on your rental properties, call me on 01908 774323, leave a comment below or click here to ping over an email and let's see how I can help.
About Helen Beaumont ...
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
More blog posts for you to enjoy ...