We have regularly posted blogs regarding the HMRC Let Property Campaign, such as our post here and here. These blogs explored the various developments, along with examples of the letters being sent out. To assist our readers, today sees our first tip, relating to the HMRC Let Property Campaign. The first tip is to help ensure you calculate and pay the correct amount of tax, once you know your undeclared rental profit figure.
For those who are carrying out their own calculations, HMRC provide two calculators; one is a 5 year calculator, and one is a 19 year calculator.
The Let Property Campaign allows disclosures up to 5th April 2013, and therefore the 5 year calculator deals with tax years 2008/09, 2009/10, 2010/11, 2011/12 and 2012/13. Whereas, the 19 year calculator, deals with tax years from 1992/93 up until 2012/13.
Of course, if you have undeclared rental income relating to a period prior to the 2008/09 tax year, you will see that unfortunately, the 19 year calculator is somewhat limited.
In light of this, what we would suggest is to take advantage of the freely available tax bands from previous tax years, which show the changing levels of the higher rate and lower rate tax bands, and in addition, the differing tax rates over the years. The excellent summary is here.
The HMRC Let Property Campaign is a technical area, and although the above may help with calculating the tax owed on profits, you will still need to ascertain your rental profits, by deducting all available and relevant allowable expenses.
Please do not hesitate to contact us for help; we are here to guide you through the entire process. The most important aspect is if you are a landlord affected by undeclared rental income, it is of utmost importance to come forward before HMRC come to you. And it is of even more importance if you are one of the 80,000 landlords who have received a prompted Let Property Campaign letter in the last month or so.
As specialists in landlord tax, we shall be delighted to help, and guide you through the process, and ensure you are in the best possible position.
Look out for the Let Property Campaign tip no. 2 in the coming days!