Am I a Landlord?
Background
Following on from our recent Muras Matters on HM Revenue & Customs (“HMRC”) Disclosure Campaigns, HMRC have issued an update for one of their specific campaigns – the ‘Let Property Campaign’. The update highlights some areas where people often mistakenly don’t think of themselves as a landlord or do not believe they are required to declare rental income.
Detail
An individual can find themselves becoming a landlord for many different reasons, and not always as a result of intending to generate rent as another source of income. HMRC gives the following examples where individuals may rent out a property but may not have thought of themselves as being a landlord:
- Moving in with a partner
- Inheriting a property
- Purchasing a property as an investment
- Divorce
- Relocation
- Moving into a care home
- Jointly owned investment property
- Property bought for a family member at university
- Armed forces
- Accommodation tied to employment
Many of the above highlight examples where an individual may keep a property rather than sell it.
HMRC also point out a number of common errors where individuals believe they do not need to declare rental income as they do not make any profit, for example where income only just covers the mortgage payments (for tax purposes however only the interest amount of the mortgage repayment is deductible against rent). Other areas of common mistakes include jointly owned properties and allocating the expenses correctly between the joint owners.
HMRC’s campaign is aimed at encouraging individuals who let out residential property in the UK or abroad and who have not declared their letting income to come forward voluntarily to bring their tax affairs up to date. In return they will benefit from lower penalties than they would otherwise pay if HMRC had to approach them first.
If you believe you may fall into one of the highlighted examples and you would like any further information or advice in connection with the above, or assistance in making a disclosure, please contact our Tax Director, Jenny Marks.
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