What Does the Let Property Campaign Mean for Landlords?
A surprisingly large number of landlords in the UK are unaware of their tax obligations on rental income. These are often referred to as “accidental landlords” and are usually those who have bought a second property/inherited a house and rent it out without knowing they owe tax on that income.
If you have found yourself in this position, there’s no need to panic. The Let Property Campaign aims to make rectifying your tax affairs simple and painless.
This article contains:
- What is the Let Property Campaign?
- Who can use the Let Property Campaign?
- Who can’t use the Let Property Campaign?
- How does it work?
- How to take part in the Let Property Campaign
What is the Let Property Campaign?
The Let Property Campaign is a government scheme which helps landlords catch up on their missing tax payments. This scheme was originally announced in 2013 and was designed to encourage taxpayers to voluntarily disclose any tax they owe from renting out properties.
It gives you a chance to bring all your tax affairs up to date in order to get the best possible terms to pay the tax you owe.
Who can use the Let Property Campaign?
This scheme applies to any residential property landlords with undisclosed taxes, such as:
- Those who own multiple properties or single rentals
- Those who rent specialist accommodation such as student or workforce rentals
- Holiday lettings landlords
- Landlords who rent out a room for more than the Rent a Room Scheme threshold
Who can’t use the Let Property Campaign?
The scheme does not apply to those who own non-residential or commercial property such as shops, garages or a lock-up.
It also cannot be used by those who want to disclose income on behalf of a company or a trust.
How does it work?
For landlords who have undisclosed income, you need to tell HMRC about this unpaid tax as soon as possible. Under this scheme, you then have 90 days to work out and pay the tax you owe.
The main benefit of taking part in this scheme is that you get to choose the best possible terms to clear up your tax affairs. You may also benefit from lower penalties than you would if HMRC found out you were not paying tax. This will depend on how late the tax is, how much you owe and whether you have deliberately avoided it or not.
If you have made a simple mistake when declaring your rental income, you will only have to pay for a maximum of six years – no matter how many years behind you are in your tax payments. On the other hand, if you have not come forward and HMRC finds out, HMRC can look into up to 20 years of financial history and even launch a criminal investigation.
How to take part in the Let Property Campaign
The main steps to take part in the Let Property Campaign are:
- Tell HMRC you want to take part
- Tell HMRC about any income or gains you have not already disclosed
- Make a formal offer of when and how to pay
- Pay the tax you owe
- Provide HMRC with any details they ask for along the way.
The best thing you can do in this situation is come clean to HMRC as soon as you realise you haven’t disclosed rental income. It’s a fairly common mistake to make and schemes like this are designed to help you sort all your tax affairs out.
If you would like help and advice on your tax obligations, feel free to get in touch with us for a free consultation.