Big Results For Let Property Campaign
In 2013, a controversial campaign was launched. This incentive was designed to encourage UK landlords to get their tax affairs in order and disclose tax on their previously undeclared income. This was called the ‘Let Property’ campaign, and so far it has been incredibly successful. In fact, in October HMRC announced that this campaign had brought in more than £50m in tax. This was due to over 100,000 landlords coming forward to disclose tax on previously undeclared income.
What Is The Let Property Campaign?
The Let Property Campaign was launched by the Government in September 2013, with the aim of encouraging landlords to pay the tax they owed on undeclared income. This applied to any individual who was letting out a residential property either in the UK or abroad. In order to convince people to come forward and admit that they owed tax, the Government added an incentive. Landlords who came forward under the Let Property Campaign would not be subject to any penalties or criminal prosecutions, provided they got their affairs in order. Landlord tax is a complex area, and the Government admitted that ‘there are many reasons why landlords may misunderstand the rules and so not pay the right amount of tax.’
The campaign was designed to help landlords work out what they should be paying in tax, and pay anything due but undeclared up to this point. Because of this opportunity to come forward without fear of prosecution, this also allows HMRC to investigate into those landlords who are not disclosing their income and prosecute accordingly. While it was initially met with some scepticism, the campaign was surprisingly successful with over £50m in undeclared income tax being retrieved over the 18-month period. In addition to helplines and online resources, HMRC also ran a Twitter Q&A evening answering questions on current tax law for landlords, allowing them to get more personalised and timely answers. The aim of this evening was to educate landlords, and provide them with access to a group of expert organisations with all the knowledge and information they could need.
What Landlord Tax Means For You
Just like any other job, landlords are required to pay income tax on their rental income, minus any day-to-day running expenses that may be incurred. Some landlords may also be required to pay Class 2 National Insurance contributions, if the work they do renting out the property counts as running a business. The new landlord tax should in theory only apply to the higher earning landlords in the country, and not apply to those making minimal profit. The tax is initially aimed at those landlords currently paying 40% or 45% tax. However an unforeseen knock on effect is that some basic rate taxpayers will also feel the effects of the increase, because the change in regulations will push them into a higher rate tax bracket. In this scenario, only those wealthy enough to buy properties in cash outright will be unaffected by this change, as they will not have mortgages outstanding on their properties in 2017.