Are you aware of what rental income and expenses you need to declare? We take a look into the Let Property Campaign and what it means for you if you’re a landlord.
What is the Let Property Campaign (LPC)?
When the LPC, or Let Property Campaign, began in 2013, it was estimated that up to 1.5m landlords had underpaid or failed to pay the correct amount of tax. The campaign was set up for those landlords to make voluntary disclosures to HMRC and take advantage of the reduced penalties for doing so.When does a landlord have to declare their rental income?
If your annual gross property income – that is the rental income you receive – is £1,000 or less, then this is covered by the property allowance. In other words, you don’t need to contact HMRC. If your annual gross property income is over £1,000 and up to £2,500, then you should contact HMRC. They may be able to collect the tax due through the PAYE system by amending your tax code. That can only be done, however, if you are already paying tax through your salary or pension, for example. If your property income (that is rental income less expenses) exceeds £2,500, then you will need to register for self-assessment.What is the process of the LPC?
Firstly, speak to an accountant because if you register for the campaign yourself, you will only have 90 days to submit and work out your proposal. It’s important for you to ensure you are ready to make the declaration first. That means getting all income and expenses together, including rental income and other income, such as P60s and P11Ds from employment. Once you’ve got everything together, the following happens:- Notify – you need to tell HMRC that you intend to make a declaration under the LPC. They will write back to you with a reference number and give you 90 days to make the declaration and pay the amount due.
- Disclose – you need to calculate the amount of underpaid tax along with the interest due and the penalty you are offering to pay as part of the declaration.
- Pay the tax you owe – HMRC ask for payment on the same day as the declaration is made however, payment plans can be set up if required.
- Acceptance or rejection – HMRC will write back to you to state whether they accept your formal offer or reject it. They may also request further information at this point.