Landlords warned to get tax affairs sorted

Published on

Private landlords are being warned to get their tax affairs in order to avoid being caught in a crackdown by tax inspectors.

Phil Bates, Principal at Cheshire accountant Phillip Bates & Co, says the potential penalties are severe unless landlords ensure they have registered with HM Revenue & Customs (HMRC).

Bates, who has over 100 landlords as clients, says HMRC has stepped up its campaign to bring to book any landlords who they believe are avoiding paying tax due on rental properties.

Figures for 2013-14 showed that tax inspectors obtained more than £130 million as a result of enquiries into underpayments of capital gains tax.

Fewer than 500,000 taxpayers are registered with HMRC as owning second properties. HMRC estimates that the true number of landlords is much higher, at around 1.5 million.

Since January, a number of landlords have contacted Phillip Bates & Co having received letters from the Revenue over unpaid tax.

Bates said: “A number of new clients are private landlords who have fallen foul of HMRC. A landlord must pay tax on profit just like any other business but only after costs – known as allowable expenses – have been deducted.

“This is where there is sometimes uncertainty. For example, allowable expenses do include reasonable repairs and maintenance to keep a property in good order, but they do not cover renovation costs incurred prior to letting or extensions, although these can usually be claimed for capital gains tax purposes when the property is sold.

“The potential penalties for landlords failing to pay their tax are severe – as much as 35% of the potential lost revenue is standard, where HMRC makes initial contact with landlords.

“The Revenue is able to gather information on private landlords from various sources. The way to avoid a nasty investigation is to register as soon as possible and ensure your tax affairs are in order.

“The penalties are likely to be reduced or avoided entirely if a landlord advises HMRC first rather than waiting for the Revenue to catch up with them.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

The Marsden appoints chief customer officer

Marsden Building Society has appointed Julia Brook as chief customer officer. Brook (pictured) will be...

Limited company landlords expect yields to rise despite higher costs

Most residential limited company landlords expect rental yields, demand and property values to increase...

Darlington posts record lending as mortgage growth lifts assets above £1bn

Darlington Building Society reported record gross mortgage lending of £234m in 2025, as the...

Twenty7tec hires Nick Wakeham to lead data sales push

Twenty7tec has appointed Nick Wakeham as head of data sales as it looks to...

SAMPAN to hold second mortgage industry event in Solihull

The South Asian Mortgage Professionals & Allies Network will hold its second industry event...

Latest publication

Other news

The Marsden appoints chief customer officer

Marsden Building Society has appointed Julia Brook as chief customer officer. Brook (pictured) will be...

Limited company landlords expect yields to rise despite higher costs

Most residential limited company landlords expect rental yields, demand and property values to increase...

Darlington posts record lending as mortgage growth lifts assets above £1bn

Darlington Building Society reported record gross mortgage lending of £234m in 2025, as the...