HM Revenue & Customs Release Landlord Tax Consultation

A new consultation has been launched by HM Revenue & Customs with the aim of ensuring landlords are paying their fair share of tax, adding tax checks to private rental sector licensing schemes.

HM Revenue & Customs consultation document found that the majority of UK taxpayers pay the full sum that they owe. However, the government uncovered a small minority active in the ‘hidden economy’ engaging in tax dodging. The consultation explains that the best way to combat non compliance is to prevent it from happening in the first place. They can then crack down on the minority who then break the rules.

The document, which is 37 pages long, includes the implication that applying for HMO licences could also possibly involve ensuring applicants are compliant with tax laws before renting out properties. 

HMRC has condensed the document into four key points essential for landlords to read. First time applicants must be aware of their taxable status and be able to register as soon as they can once they begin trading as a landlord. Secondly, those who are seeking to renew licences will need to have checks carried out and confirm and provide evidence of their tax-registration status. Thirdly, the focus will be put on the landlord or property investor applying for a licence in order to ensure they show proof of tax registration and payment. Finally, licensing authorities, who are usually local councils, will not be expected to conduct tax checks. They will instead be expected to ensure that representatives see all evidence of tax registration before the granting of new or renewed licenses.

The consultation reads the government ‘values the private rented sector and wants to see a strong, healthy and vibrant market, which meets housing needs in a professional way. This includes ensuring that landlords are reporting and paying the tax they owe.’

The closing date for consultation is March 2. Details of the consultation are available on the HMRC website.

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