Taxman gathers in more money from private landlords

Buy-to-let landlords are handing over more money to the taxman.

HMRC’s take from landlords in income tax on their rental income in 2010/11 was up 13% on the previous tax year.

Tax advice firm UHY Hacker Young said buy-to-let investors paid £2.02bn in income tax on their rental income in 2010/11, up from £1.78bn.

The firm said this was due to HMRC’s growing scrutiny of property investors. There are two dedicated task forces looking at private landlords’ tax affairs, one based in the south-east and the other in Yorkshire.

HMRC is also currently running a campaign under which people who have not declared a property sale (other than their main residence) are urged to come clean. The campaign ends on September 6.

“Once the deadline has passed, we expect HMRC to become far more aggressive in pursuing undeclared rental income as well as property disposals,” said Mark Giddens, head of private client services at UHY Hacker Young.

“Buy-to-let investors need to be aware of HMRC’s increasing concern about tax evasion by landlords. Their actions to date show that they are quite capable of matching Land Registry records and data from letting agents with taxpayer files and picking out discrepancies.
“As buy-to-let increases in popularity, there is inevitably more for HMRC to investigate. Some might simply fail to understand what their liabilities are and how to calculate them properly; others might think that they will be below HMRC’s radar.”