Landlords reminded to check tax payments to prevent evasion
Responsible landlords are sure to be disappointed to hear that some buy to let property owners are failing to pay enough – or in some cases, any – tax on the income they receive from tenants.
Research carried out by HM Revenue & Customs (HMRC), seen by Exaro, suggests that landlords are evading at least £550 million in tax every year, the Independent reports.
Currently, £1.8 billion in tax is being collected on rental income, so HMRC estimates that 23 per cent of the levies that should be charged are being dodged by unscrupulous individuals.
The sum comes from the 2009-10 tax year and is almost four times what HMRC expected to see. Despite a crackdown in certain parts of the UK such as London, the organisation is thought to have failed to create the desired effect and encourage landlords to pay up.
“On this scale, it is serious tax evasion,” said the Chartered Institute of Taxation’s John Whiting.
A statement from HMRC suggests that it is people who fill in self-assessment tax returns that are the worst culprits for evasion, getting out of paying £400 million a year.
“This is an area where people try to cheat us,” it told the newspaper.
Another, more widespread crackdown is now likely to be imminent and could involve using Land Registry records to find people who own a portfolio of properties but have not declared they are letting them out.
Tax evasion is a criminal offence, but many people may be accidentally paying the wrong amount of tax because they are unaware of the rules and regulations.
If you are a landlord, it is well worth brushing up on things like tax and other points of law.
For instance, you have to pay income tax on the profit generated from letting after deductions for allowable expenses such as buy to let insurance and petrol used on trips to make regular inspections.
Article courtesy of Stride
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