Advice For Landlords

If you owe tax on the income you receive from letting out a property then as a landlord you are obliged to tell HM Revenue and Customs (HMRC) about this, especially if you have not declared it.
 The scheme which is not open to companies or trusts started in 2013 and is still active.
Let Property Campaign

Let Property Campaign Deadline

Once you have made a declaration to HMRC either directly or through an advisor, have 90 days grace to pay the amount you owe. This is called a ‘Unprompted Disclosure’. The three months start ticking once HMRC has written back with a reference number. You are basically volunteering that you have undeclared tax to pay.

Who Can Use The LPC?

You are able to report on undisclosed taxes that may have become due in the past on rental income to HMRC under the LPC. This applies if you rent out either a single or multiple residential properties as an individual, not a company.

This includes you if you:

  • rent out a single property
  • rent out more than one property
  • are a specialist landlord – where you may rent out to students or workforces
  • rent out a room in your main where the income exceeds the Rent a Room Scheme threshold
  • live overseas and rent out a property in the UK
  • live in the UK and rent a property overseas
  • rent out a holiday home (even if you or your family use it yourself)

Many don’t inform HMRC if they have been making extra money from property. Since 2008 and the closure of the incentives to own buy to lets, profits from rental have been slim. Many think that if there is no profit from renting out property then there is no requirement to inform HMRC. This is simply not the case! It is a requirement that the person reting out the property must be registered for self-assessment. Any profit (large or small) or loss, must be entered onto the form. Whilst the landlord can only use the campaign if they have undeclared rental income, they must declare any other income from self-employment.

You cannot use the campaign if you are:

  • a company then you cannot use this scheme.
  • an individual renting out a commercial property then you cannot use this scheme.

HMRC have an online Let Property Campaign questionnaire that you can fill in to determine whether you need to disclose any income tax on your property.

Landlord Disclosure

HMRC have stated that if it gets to the point where they have to write to a landlord about property income and the landlord has not made any disclosure voluntarily, then this will be regarded as prompted and the landlord will lose out on any favourable penalty conditions.  If however, they do make a full admission by the date mentioned in the letter then the let property campaign penalty may be reduced from between 35% and 75%

How Can HMRC Tell If I Owe Money From Renting Out Property?

HMRC have more power than you think. They can force letting agents and local authorities to hand over details. This includes private property landlords like you! Once they have this information they may write to the landlord inviting them to take part in the LPC. On rare occasions, HMRC will extend the three-month deadline. For example where the landlord needs specialised tax advisor help and where calculations are complicated. Clear communication from a tax advisor like Kinsella is the key to this, which is why you shouldn’t attempt to do this without help. It is on the nature of HMRC to come back with questions. However, with our vast experience and through the ex-HMRC professionals we employ, we can provide a clear route to the lowest penalties.

Disclosing Unpaid Tax From Rentals

HMRC sole reason for existing is to collect all taxes due especially from property rental. They are only interested in receiving an LPC disclosure if this is the case and you have un-paid property tax. Letting out residential property is not always profitable so Kinsella will always provide a full P&L (Profit and Loss) to HMRC. If there are losses then, of course, these can be set against any future profits. If an individual is not already registered for self-assessment then they must not assume that HMRC will do this for them just because they have disclosed through the LPC. We would always recommend that an individual is registered. This type of landlord disclosure is the only route an individual has to declare unpaid rental income and any tax due.

Let Property Campaign Penalties

HMRC have a sliding scale of penalties depending on how helpful you are in declaring the tax that you owe. Ultimately the penalty can be 100% of the tax so you need to act now if you believe you owe any tax under this scheme. In fact, the penalty can be as high as 200% if there is offshore income to declare! It is up to you to prove ‘reasonable excuse’ if you fail to pay the tax after your January 31st deadline.

This is where we can help you – For confidential advice and help – Call us before you act! 0800 471 4546

Speak to Kinsella Tax before you speak to HMRC – We offer an anonymous help & tax investigation advice service which will protect you from the prying eyes of HMRC – Remember, once you have declared you only have 90 days to pay so let us help you now – call 0800 471 4546


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