Getting to grips with unpaid property tax handshake close up image

Getting to grips with unpaid property tax

Worried about unpaid property tax? Tax expert Steve Sims explains why now is the time to tell HM Revenue & Customs (HMRC) as time is running out on a special deal for landlords.

Time is running out for landlords to catch up with their financial affairs under a special scheme aimed to encourage property people behind with their tax returns to get back on track.

HM Revenue & Customs (HMRC) has run the Let Property Campaign for several months.

The campaign is not an amnesty that gives landlords a chance to write-off unpaid tax, but the tax man does promise to offer the best possible terms to landlords with letting property in the UK or overseas who are behind with their tax.

However, landlords have to act quickly as the campaign is due to close in the spring, although HMRC has yet to announce a deadline day.

How to make a Let Property Campaign declaration

Landlords or their tax agents must call the campaign hotline on 03000 514 479 and submit a notification form. The phones are manned between 9am and 5pm Monday to Friday.

If HMRC accepts the notification, the landlord has three months to work out what tax they owe and then pay the full amount, including any interest and late payment penalties due.

These extra charges are generally much less that those imposed if HMRC finds out a landlord owes tax and has chosen not to take part in the campaign.

Download a notification form

Download a disclosure form

Who should make a disclosure?

You can take part in the campaign if your letting business covers one or more of these activities:

  • Renting out buy to let homes or shared houses
  • Collecting more than £4,250 in rents a year from lodgers in your own home, whether you are an owner or a tenant subletting
  • Living overseas and letting homes in the UK
  • Living in the UK and letting homes overseas
  • If you have a second home and sometimes let it out to holidaymakers

You cannot report undeclared income as part of this campaign if:

  • You run a property investment or property management company
  • Rent out commercial property

For landlords who are unsure about whether they have to make a disclosure, HMRC has an online questionnaire to help them decide

HMRC also has a number of case studies to help property people work out whether they should pay tax on rental income.

What happens if I just keep quiet?

HMRC threatens that landlords who have failed to voluntarily declare their back taxes under the campaign will face tougher penalties when the campaign ends.

These could add up to double the tax owed on UK rents and 200% on rents collected from homes overseas. 

The tax man has put together a database of property investors from information supplied by the Land Registry, letting agents, buy to let mortgage lenders and other sources. The chances are that if you do not get straight with the Let Property Campaign, then you will be found out because your letting property will be listed on this database.

Read more information about the Let Property Campaign and making a voluntary disclosure on the HMRC website.

With 20 years experience in the property industry, Steve Sims is a landlord, property developer, tax consultant, writer and financial journalist.  Steve wrote the best-selling book 'Understanding & Paying Less Property Tax for Dummies' and teaches courses helping landlords with tax matters for the Residential Landlord Association (RLA).

Landlord Insurance Steve Sims
Steve Sims

Steve Sims
Last Updated: 09 Mar 2015