Letter from HMRC – Reporting Rental Income

Many property owners in the UK may have recently received a letter from HMRC regarding ‘income from letting property’. Individuals will receive letters where the HMRC compliance department have reason to believe that the individual has one more properties that are rented (or have been rented in the past), and the income has not been declared to HMRC.

Do I have anything to report/pay?

Subject to certain certain specific exemptions, if an individual rents property and receives an income, they will need to report the income and expenses to HMRC each tax year (6 April to 5 April each year). Where there is a profit for the year, there may well be pay tax on these profits.

It is important to note, especially for individuals who have not calculated their rental profits before, that there are specific rules on costs that can/cannot be deducted when calculating rental profits.

Next steps

If HMRC have enquired into your property and tax affairs, then the next step will be to begin the process of providing the relevant information to HMRC to report the undeclared rental income. We can support you throughout the process and liaise with HMRC on your behalf to ensure that any misunderstandings are resolved and that your best interests are protected.

If you have not received a letter, but you believe you have rental income to declare to HMRC, you should consider making a voluntary disclosure, to report the undeclared income, and pay any tax due.

HMRC can impose penalties where a taxpayer has failed to report taxable income. However, where an individual is communicative and forthcoming in bringing their tax affairs up to date, there is scope for HMRC to apply lesser penalties at their discretion.

If you have received a letter from HMRC, or have any questions or concerns about your rental property(s), please contact a member of our team.

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