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Last call to buy-to-let property owners!

As the end of January approaches, it seems that there are a large number of buy-to-let property owners who have still not completed an income tax return.

HMRC estimate that there are 1,500,000 people in the UK who own more than one property, but have calculated that only 500,000 people have declared income from a second property. This leaves approximately 1,000,000 people that have not reported any such income to HMRC. Even allowing for those who hold a second home but do not rent it, for example, a holiday home or one provided for an elderly parent or adult child, this still leaves a huge number of people who appear not to have taken steps to bring their tax affairs up to date.

Strictly speaking, you are only required to complete a tax return if you have a tax liability, so if you rent out a property but do so at a loss, there is no legal requirement to report this to HMRC. However, tax rules permit you to carry a loss forward to reduce future years’ profits; it is therefore still in your interest to complete a tax return in order to quantify and claim this loss.

It may be of interest to note that special investigation teams at HMRC are said to have already begun investigations into 50,000 second home owners who have not made any kind of declaration to the tax authorities. Such an investigation may ultimately conclude that there is no additional tax to pay, for example where there is a loss, but it is an uncomfortable and lengthy process to be avoided if at all possible.

We take this opportunity to remind you that the amnesty scheme to declare income from earlier years is still available and offers you a chance to bring your tax affairs up to date within a low penalty regime.

If you are concerned about a second property, we can help you. It is not too late!