HMRC has actively started to take a greater interest in the rental market, and we have seen an increase in the number of landlords, especially those on a low income who have received tax enquiry notices due to unreported capital gains or rental income.
Owners of property/flats who have taken advantage of the 2020 COVID-boom via AirB&B need to be especially careful. As part of its tax settlement in 2020, AirB&B has agreed to share with HMRC details of income earned by its UK hosts. With some of this income becoming reportable as part of the 2020/21 tax returns (due 31 Jan 2022), it must be reported accurately if you have received income.
HMRC’s algorithm will undoubtedly be checking tax returns for the expected bump in rental income. It will easily be able to identify those returns where the income has been potentially under-reported.
With the recent changes to interest deductions and now this expected staycation windfall is due to become taxable. Landlords become an obvious target for HMRC over the next couple of years.
Suppose you are a landlord who has been lucky to receive a benefit from the COVID- staycation. In that case, our advice is to ensure that you know what your obligations are before submitting your self-assessment return.
We have also had several individuals approach us with undisclosed rental income that they have or wish to disclose under HMRC’s Let Property Campaign. Our advice is to not rush into such settlements. We have seen many situations where HMRC seeks to maximise tax receipts via penalty and extension of the six-year disclosure window.
If you wish to discuss any of the above or see how we may assist you, please contact us today.
All information provided in this article is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. It should in no way be considered as advice provided by Hawthorne Tax Consultancy or any of its principals. All information is deemed to be correct at the time of writing.