The issue of tax avoidance has been in the news a great deal in recent days, as comedian Jimmy Carr can testify. But it is not just celebrities and the super-rich that need to be concerned, landlords are also facing a crackdown on unpaid taxes.
While the vast majority of landlords are perfectly law abiding when it comes to paying tax on the rent they receive from their properties, it can be all too easy to make a mistake on tax returns or even forget to file your returns at all.
For those landlords for whom this is the case, the Landlord Syndicate – a network of companies providing a free support centre for landlords – has warned they may soon be getting a visit from HM Revenue & Customs (HMRC).
An HMRC taskforce has been launched specifically focussing on landlords in certain areas of the UK, says the organisation, with the regions of East Anglia, London, Leeds, York, Leicester, Nottingham, Lincoln, Durham and Sunderland the primary targets.
Amer Siddiq, managing director of Tax Insider and a member of the Landlord Syndicate, said that any landlords that think they may discrepancies in the way they have handled their taxes to seek the advice of an accountant immediately, rather than waiting until they are contacted by HMRC.
“It is always the landlord’s responsibility to let HMRC know that they are receiving income from a property, even if they are not making a profit from it,” he said.
“Those that have not done so already need to speak to an accountant or tax advisor as soon as possible.”
Even those landlords who believe they have filed all their tax returns complete and on time should make sure all documents and records relating to their rental income are in order, just in case they are contacted by HMRC.
“Every landlord should be prepared in case they get a knock at the door,” said Mr Siddiq.
“Even if you have declared your income/expenses, then it is just as important to make sure you have a good book keeping system in place where everything has been logged so HMRC can easily be satisfied that your property accounts are in order.”
The Landlord Syndicate recommends landlords adhere to a number of simple practices in order to keep track of their tax and finances at all times.
This includes using a separate bank account into which rental income can be paid and expenses can be drawn from and keeping all receipts pertaining to the business no matter how large or small, including those relating to their professional landlord insurance.
Meanwhile, it was also reported this week that average rents rose for the second consecutive month in May.
According to LSL Property Services’ latest Buy-to-Let Index, the average monthly rent in England and Wales rose by 0.4 per cent to £712 last month.
The report also revealed that London’s average rents rose to their highest on record in May, with the 0.6 per cent increase taking monthly rents in the capital to £1,038.
