HMRC Let Property Campaign (LPC) – How does this affect you?
The HMRC Let Property Campaign (LPC) is intended to encourage landlords with undisclosed property income to make voluntary disclosures to HMRC.
If you’re a landlord and you have undisclosed income, you must tell HMRC about any unpaid tax now. Under the LPC, you’ll then have 90 days to work out and pay what you owe.
You may believe you are not making a taxable profit on your rental properties because your mortgage repayments are greater than the rent you are receiving; however only the interest element of the mortgage repayment is tax deductible against the rental income, the capital element of the repayment is not tax deductible.
Landlords who come forward under the Let Property Campaign will benefit from reduced penalties rather than if HMRC discovers the undisclosed income. HMRC discovery will lead to higher penalties and possible criminal prosecution.
Buy-to-let property disposals, act swiftly
If you dispose of your residential buy-to-let (BTL) property you must report and pay tax on any gains within 30 days of the sale rather than waiting to disclose it on your self assessment tax return.
This reporting requirement is rarely advised to sellers by conveyancing solicitors in our recent experience.
To satisfy the HMRC 30 day reporting procedure, it is first necessary to obtain a Personal Tax Account with HMRC, which in itself can take time. We advise that as soon as you start to think about disposing of a BTL on which there may be capital gains tax to pay, it is prudent to make arrangements to set up a Personal Tax Account if you do not already have one.
HMRC will apply penalties for failing to meet the 30 day reporting deadline and interest will also be chargeable where the capital gains tax arising is not paid within 30 days of the disposal.
Please do not hesitate to contact us if you require assistance with undisclosed BTL income or capital gains reporting. We can assist with ensuring all obligations to HMRC are met to avoid penalties and interest, and ensure all claims to reduce your tax liabilities are made on a timely basis.
Stephanie Silcock – Manager