HMRC launch campaign to retrieve £500 million from letting industry
All conveyancing firms and professionals need to ensure their buy-to-let clients are aware of the looming Self Assessment registration deadline.
The majority of your clients will know any property they let within the UK will be subject to income tax. However, this applies to landlords who live within the UK as well as abroad, so all will need to be reminded to report their income via a Self Assessment Tax Return.
All landlords be registered for a Self Assessment by the end of this week (Sunday 5th October 2014). Paper returns will then need to be submitted to HM Revenue and Customs (HMRC) by 31st October and online returns will be due by 31st January 2015
Carole Charge, director at letting firm Lenders, says landlords should be keeping a clear record of their rental property expenditures, to help avoid errors in their tax return.
The Lenders director also says for 2014, the HMRC is carrying out a Let Property Campaign, to try and recover the estimated £500 million tax underpayment within the property letting industry.
As part of the campaign, letters have been sent to letting professionals requesting details of rents collected during the tax year ending 5th April 2013.
If a landlord is not up to date with their tax returns, Charge assures they will have the opportunity to disclose this information via the Let Property Campaign, allowing them three months to calculate and pay what is owed. If they then fail to submit their return, they will be liable for fines and in some circumstances, prosecution.
Lenders also advise landlords should be made aware of allowable deductions that can be attributed when their rental property is occupied or available to let. Such allowable expense deductions include:
- Mortgage interest on loans used to purchase rented property or fund improvements.
- Fees charged by an agent to let and manage the property.
- Accountant’s fees.
- Ground rent and maintenance charges on leasehold property.
- Water and sewerage rates, unless charged to tenants.
- Building and contents insurance.
- Insurance claim fees.
So don’t delay — ensure all your buy-to-let clients are aware of the HMRC crackdown and ensure they register for this year’s Self Assessment.
For more information on the HMRC Let Property Campaign, call the dedicated helpline on 03000 514 479.