Accidental landlords have become landlords unexpectedly, typically due to inheriting a property, moving and renting out their previous home, or changing financial circumstances.
The Let Property Campaign is an HM Revenue and Customs (HMRC) initiative that encourages landlords who receive rental income from their properties to declare this income and pay the appropriate taxes. The initiative is aimed towards accidental landlords as well as those who have not reported rental revenue in the past.
The purpose of this writing is to provide information on the Let Property Campaign and what it means for accidental landlords.
- Overview of the Let Property Campaign
- History and Background
- Goals and Objectives
- How the Campaign Operates
- Who should participate in the Let Property Campaign?
- Who should not participate in the Let Property Campaign?
- Disclosure outside of the Let property campaign
- Benefits of Participating in the Let Property Campaign
- Obligations for Accidental Landlords under the Let Property Campaign
- Payment of Tax
- Record Keeping
- Filing Tax Returns
- Final Remarks
Overview of the Let Property Campaign
History and Background
HM Revenue launched the Let Property Campaign and Customs (HMRC) in 2013 to target accidental landlords who have yet to declare their rental income and are not paying the appropriate taxes. The campaign allows accidental landlords to come forward, declare their rental income, and pay any taxes owed without facing severe penalties and fines.
Goals and Objectives
The main goal of the Let Property Campaign is to increase compliance with tax laws related to rental income. By encouraging accidental landlords to declare their rental income and pay any taxes owed, the campaign aims to increase revenue for the government and ensure a level playing field for all landlords.
How the Campaign Operates
Accidental landlords participating in the campaign receive support and guidance from HMRC to help them understand their obligations and navigate the disclosure process. The campaign operates through a series of deadlines and information-gathering initiatives, and accidental landlords who do not participate may face increased penalties and fines.
Who should participate in the Let Property Campaign?
- Landlords who have not declared rental income from their properties to HM Revenue & Customs (HMRC)
- Landlords who have under-declared their rental income
- Landlords who have not been keeping records of their rental income and expenses
- Landlords who have not previously registered for self-assessment
Who should not participate in the Let Property Campaign?
- Landlords who have been fully declaring their rental income and keeping records of all rental-related expenses
- Landlords who have already registered for self-assessment and have been fully reporting
- Landlords who have not been receiving any rental income from their properties
- Landlords who have been renting out their properties for less than seven years
Disclosure outside of the Let property campaign
Disclosure outside of the Let Property Campaign refers to landlords’ voluntary declaration of rental income to HM Revenue & Customs (HMRC). This is an opportunity for landlords to report any previously undisclosed rental income, regardless of whether they fall under the scope of the Let Property Campaign.
By disclosing outside of the campaign, landlords can ensure that they fully comply with tax laws and regulations and avoid potential fines or penalties. This is a proactive step that landlords can take to manage their tax affairs and reduce their financial risk—making a voluntary disclosure can also result in lower penalties. It may be considered a mitigating factor when determining the number of fines imposed by HMRC.
Benefits of Participating in the Let Property Campaign
- Joining the Let Property Campaign shows that you care about following the rules when it comes to paying taxes on rental income. By declaring rental income and paying the appropriate taxes, accidental landlords can reduce the risk of being audited and facing fines and penalties for non-compliance.
- The Let Property Campaign allows accidental landlords to declare previously undeclared rental income and pay any owed taxes. By doing so, accidental landlords can reduce or avoid fines and penalties for non-compliance, which can be substantial.
- Participating in the Let Property Campaign can help accidental landlords better manage their rental income and expenses by keeping accurate records and understanding their tax obligations. This can lead to improved financial management and a better understanding of their rental business.
- Participating in the Let Property Campaign provides accidental landlords with an opportunity to understand their tax obligations as a landlord better. This increased knowledge can help them make informed decisions about their rental business and ensure future compliance with tax laws and regulations.
Obligations for Accidental Landlords under the Let Property Campaign
Accidental landlords participating in the Let Property Campaign must declare all rental income received from their properties, including any rent from subletting. This includes income from short-term rentals such as those made through online platforms.
Payment of Tax
Accidental landlords must pay any taxes owed on their rental income. Accidental landlords who have not declared their rental income in the past may also be required to pay interest and penalties on the taxes owed.
Landlords, even the accidental ones, need to be careful about losing track of money. Among these are all financial and transaction records pertaining to their rental activity. Accurate records are essential for compliance with tax laws and regulations and can help accidental landlords better manage their rental business.
Filing Tax Returns
Accidental landlords must file tax returns for any rental income received. Both individual tax returns based on a person’s own assessment and corporate tax returns are part of this category. Accidental landlords should seek professional guidance to ensure they are filing the correct tax returns and that they are doing so accurately and on time.
In addition to reading this article on the Let Property Campaign, our team at Legend Financial is here to walk you through the disclosure procedure via our in-person or online disclosure service.