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HMRC targeting under-declared landlord income

As a landlord, it has been a legal requirement to hold your tenant’s deposit in a government approved and regulated tenancy deposit scheme, since the Housing Act 2004 came into effect.

HMRC are now able to use this data to target any landlords who they think may be either under declaring property income on their self assessment tax returns, or indeed avoiding or under declaring any capital gains tax arising from a sale of residential property.

HMRC has wide powers to tap into data help by intermediaries, such as it’s recent use of third party taxi booking platforms to identify drivers who might not be declaring cash income in full, or epos systems for high cash retailers.

What does this mean for landlords?

There are currently three government approved schemes in England and Wales, all of whom have privacy policies allowing them to share data with government departments. These schemes are:

It has come to light that HMRC has recently made a request to at least one of these schemes for data relating to landlords who have deposits in the schemes.

This has allowed them to cross check details with their own data relating to the 2022/2021 tax year, and in recent weeks have sent out more than 600 ‘nudge’ letters to landlords who have submitted deposits under such schemes accusing them of under declaring and underpaying tax for that period.

HMRC is at pains to state that these letters are not the opening of an enquiry, but to request that landlords carefully check their tax return information for the 2020/21 and 2021/22 years, and make amendments as well  pay any outstanding or under declared liability within 30 days of  receiving the letter. It is also an opportunity to remind landlords of their obligation to report the sale of any property disposal and pay any CGT (capital gains tax) due on ay profits made, within 60 days of sale.

What if I haven’t declared rental income?

If you receive one of these letters and haven’t declared full income on your rental property investments, then as per above you have 30 days to amend your returns and pay any additional liability.

If, however, you haven’t declared rental income for several years, then you might be better to make a full disclosure under the Let Property Campaign, which was launched in 2013.

If you think that anything in this article affects you, and you would like guidance or advice on how to approach and properly declare your rental income, then please contact us on 0161 456 9666, where one of the team will be happy to help ????



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