Everyone makes mistakes. Whether you didn’t know you needed to declare the rental income you received, life got in the way of you doing it, or you just didn’t know how to resolve it; you do now; we are here to help you.

Do you have property income which you haven’t told HMRC about? Is this keeping you awake at night? If so, a disclosure under the Let Property Campaign (‘LPC’) could be the answer.

In a world where HMRC have access to more and better data more quickly and Letting Agents have more obligations to ensure landlords are correctly reporting their affairs, we recommend you report any undeclared income and you do so as soon as possible.

HMRC Let Property Campaign

The first £1,000 of income you receive from property rental is tax-free, using the ‘Property Allowance’. If you are letting out a room in your house which is furnished, you can earn up to £7,500 before paying tax under the ‘Rent-a-Room Scheme’. However, if you earned more than this and it isn’t a furnished room in your house, then you need to declare your income to HMRC.

A Self-Assessment Tax Return must be filed where:

• £2,500 to £9,999 after allowable expenses; or
• £10,000 or more before allowable expenses.

If you do not usually send tax returns, you need to register by 5 October following the tax year you had rental income.

However, if you haven’t done this and you have received income from letting out residential property/(ies) historically Let Property Campaign could be the way to get your tax affairs up to date quickly and as painlessly as possible.

The LPC is not just about putting an individual’s tax affairs right regarding rental income. There must be rental income as part of any disclosure, but the application must also declare any other undisclosed income. Unlike most historic HMRC campaigns, the Let Property Campaign doesn’t have an end date.

How does it work?

The first step is to notify HMRC (either you directly, or via your adviser) that you want to declare your undeclared property income. HMRC will reply, including a reference number and giving you three months to make a disclosure. This is an unprompted disclosure, as you have volunteered to declare this income to HMRC and this is the best position to be in. If you want a tax adviser to support you during this process, we will need to get authorised with HMRC to act as your agent.

However, HMRC have access to information that can allow them to ask landlords who have received property income, which they haven’t declared to make a disclosure. This is called a prompted disclosure. Here the interest and penalties will be higher as a result. For example, periodically HMRC can gain information from local authorities or letting agents (who HMRC can legally force to provide them with information) and use this to write to individuals to whom rent is paid who may not have declared this income to them.

A three month period to calculate and declare the income should be plenty of time, especially where you use a tax adviser to support you. However, if you need more time than this, HMRC will consider reasonable extensions, the key is to keep communicating.

At the same time as the submission is made, you will have to make the tax payment to HMRC, including interest. HMRC can of course come back and ask you questions on what is disclosed, but from our experience this is unusual and disclosures are generally accepted.

More information about Let Property Campaign

HMRC only want to receive LPC disclosures where tax is due. Sometimes after the calculations have been done, due to the nature of residential property investment, there are only losses left. Where this is the case, a copy of the calculations should be provided to HMRC so they can be taken against future profits in your Self-Assessment Tax Return.

An individual who makes a disclosure under Let Property Campaign should automatically be registered for Self-Assessment. However, from our experience this typically doesn’t happen, so you or your tax advisers may have to do this for you.

LPC is the only route for people who have undeclared rental income to bring their affairs up to date and typically an individual should receive a more favourable penalty position, than if they made a disclosure by other routes, according to HMRC.

Why use the Let Property Campaign?

In short:

• You can bring all your tax affairs up to date with HMRC quickly and easily, not just undeclared property income;
• It is the only disclosure regime for people who have undeclared rental income to bring their affairs up to date;
• You are likely to pay less in interest, penalties and tax, especially if it is an unprompted disclosure;
• The process is quicker and easier, especially if you use a tax adviser to support your application;
• HMRC have access to better data more quickly, so are more likely to catch those who don’t declare all their income and the resulting interest, penalties and tax will be much higher as a result;
• Often because of the nature of residential property investment the tax isn’t necessarily very high, if indeed anything at all; and
• It means you can sleep at night with a clear conscience. How much is the price of your sanity?

Black and White Accounting

We have successfully dealt with many Let Property Campaign cases and we handle them quickly and easily, with minimal involvement from you, so you can focus on what’s more important to you. This isn’t the only tax investigation process we deal with, we deal with many different cases. Ultimately, the sooner we deal with HMRC, the lower your tax, interest and penalties will be and that’s where we will add value for money for you.

To rectify any undisclosed property income and ensure your tax affairs are in order, consider utilising the Let Property Campaign (LPC). If you’re unsure about the process or need support, reaching out to a knowledgeable self-assessment accountant can ease the journey, providing peace of mind and minimizing potential penalties.

Our empathetic and non-judgmental team want to hear from you, to help you get a resolution as quickly as possible with you paying minimal tax, interest and penalties, but more importantly allowing you to sleep again without this in the back of your mind. Email us, complete the ‘Got a Question’ form on the right hand side, or call us today on 0800 140 4644. We look forward to talking to you.