Although some landlords treat their buy to let properties as a full-time business and pay their taxes accordingly, there are an awful lot of new part-time landlords with only one or two properties to their name, who may not have thought too much about the potential tax implications of their second rental income. Well unfortunately for them, HMRC IS thinking about it and is taking steps to try and identify those landlords who are not declaring their income and therefore not paying the right amount of tax.
HMRC targets letting agents
Prior to the recent tax crackdown, HMRC tax inspectors operated a ‘spot check’ policy whereby they made random visits to letting agents and rental properties to carry out checks. Aside from being universally unpopular, this was not the best way of collecting information on landlords and tenants. However, since January, HMRC has been contacting letting agents and asking for information on all properties on their books that are managed on behalf of landlords.
HMRC cross checks information on landlords
By cross checking financial information from letting agents against other sources, HRMC are looking to make sure landlords are declaring any extra income they are earning from buy to let properties. The process is likely to be long and painful for HMRC employees, but since there are bound to be a number of landlords who have not declared extra income, it should be a lucrative one.
Declare your extra income
Landlords have until October 5th to declare any extra income from buy to let properties, so if you are a new landlord, start putting your affairs in order now!
