Taxing rental income can be a challenge for accidental landlords, who may need to gain the necessary knowledge about their legal obligations.
This guide presents all you need to know about the let property campaign and its time limits when settling your tax bills, vital information that will help ensure financial security in the future. Don’t delay; get informed today.
Background on Let Property Campaign
HMRC’s Let Property Campaign serves as a lifeline for landlords who may have overlooked their rental property tax obligations in the past, allowing them to make voluntary disclosures up until four years after profits were made. With an optional payment plan available, those with outstanding taxes can settle what they owe without having to do so all at once. Take your chance to get up to date on your rental liabilities before time runs out.
What is the Let Property Campaign?
The let property campaign gives landlords twelve months to disclose their rental income, and they will generally receive a lower penalty than if they had yet to come forward voluntarily. It also offers advice and assistance to landlords on declaring their tax affairs, as well as guidance on how to make full disclosure to HMRC.
Additionally, landlords who come forward voluntarily through the let property campaign will be able to spread their payments over a more extended period than if they disclosed them later. It can make it easier for accidental landlords to get their affairs in order and pay any tax due without incurring additional costs or charges.
It is important to note that the let property campaign only applies to rental income, not capital gains tax or income from other sources. Landlords should also be mindful that they are still liable for any taxes due on the rental property before they join the campaign.
Qualifying Criteria for Participation in the Campaign:
To qualify for the Let Property Campaign, landlords must meet specific criteria, including:
- They must have UK rental income from a residential property that is un-taxed or under-declared.
- The landowner must be an individual who owns the property or jointly with other individuals.
- The residential property must have been let or rented out for at least the last 12 months.
- The landlord must have declared all their income from letting the property in their tax return and paid any due tax within 12 months of the campaign’s launch date in 2014.
- If the landlord has previously declared the income, they must continue paying any tax due.
- The participating landlord must be up-to-date with their tax returns from previous years and in compliance with current tax regulations.
- Any discrepancies between what has been reported and what is due must be resolved before participating in the campaign.
- The campaign is not open to landlords who have previously used a disclosure facility.
- The landlord must also be currently letting the property in question.
- Landlords should note that any additional information they provide as part of their disclosure will be subject to HMRC review and could lead to an investigation if it is believed to have been deliberately chosen to reduce their liability.
- The let property campaign has specific time limits, and any disclosure must be made within the timeframe specified by HMRC.
- Finally, to participate, landlords must agree to pay any outstanding tax due for the period covered by the campaign.
By meeting these criteria, accidental landlords can take advantage of the let property campaign and ensure that all their rental income is accurately reported and taxed. It will help them to adhere to the current tax regulations and maximize their returns on time.
How Close Does the Let Property Campaign Reach?
The let property campaign covers up to 20 years, depending on individual circumstances. In general, HMRC will look back over the last four tax years you received rent from your properties and assess any undeclared taxes due. If you may owe money for more than these four years, it is possible to declare any additional undeclared income up to a maximum of the last 20 tax years. Therefore, you must provide as much detail as possible when reporting your payment to the let property campaign.
It is crucial to note that the time limits for participation in the let property campaign are strictly enforced, any submission after these deadlines will not be accepted by HMRC. Therefore, you must get your affairs in order as soon as possible if you believe you have undeclared rental income from the past.
How Far Back Can HMRC Pursue Tax Payments?
The let property campaign allows landlords to bring their rental property income into the tax system without facing any penalties, provided they disclose their earnings within 90 days. HMRC may pursue unpaid taxes from five years ago. Therefore, if you have been an accidental landlord for more than five years and want to participate in this campaign, you may still be liable for tax payments going back five years from the date of disclosure.
It is important to note that HMRC can go back further than five years in certain circumstances, such as if the landlord has been deliberately evading taxes or acting fraudulently. Suppose you are still determining whether your case falls into any of these categories. In that case, it is recommended that you speak to a tax advisor as soon as possible to avoid any potential penalties or prosecution.
In short, it is essential to stay up-to-date with all relevant legislation. You can check for updates on HMRC’s website and speak to a professional tax advisor who can provide tailored advice based on your circumstances. Keeping up to date with the let property campaign and other relevant tax law changes can help you avoid potential penalties and prosecution.
If you need any help regarding to let Property campaign or have any questions about your rental property taxes, please don’t hesitate to get in touch tax accountant in Crawley. Our team of experienced professionals can assist you with all your questions and provide you with the best possible advice.