The Government has given another strong indication that it won’t be chasing landlords for non-payment of tax.

Labour MP Charlotte Nichols quizzed the Chancellor this week on whether he planned to increase the level of tax compliance among buy-to-let landlords.

But in a written response, Jesse Norman, the financial secretary to the Treasury, would only say that the Government was committed to reducing non-compliance in the tax system among all taxpayers, including landlords.

The parliamentary exchange follows reports from think-tank TaxWatch that unscrupulous landlords are dodging £1.73 billion a year in tax.

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It believes the Government’s attempts to recoup payments – including the Let Property Campaign – are failing.

In 2013 the Government estimated that up to 1.5 million landlords had underpaid or failed to pay up to half a billion pounds in tax for the 2009-2010 financial year.

£540 million

It estimates the tax gap arising from those in employment who haven’t declared and therefore not paid tax on lettings income, at £540 million for 2018-19.

But TaxWatch says at least two thirds of tenancies in England are owned by those who don’t receive pay through PAYE.

Norman (left) said the Let Property campaign had prompted about 55,000 additional disclosures and raised an estimated £226 million.

He added that from April 2023, landlords with business or property income over £10,000 per year which are liable for income tax will need to keep digital records and use software to update HMRC quarterly through Making Tax Digital.

“It will also make it easier for landlords to get their tax right, saving time and enabling them to see, close to real time, the health of their finances,” said Norman.

A spokesperson for the National Residential Landlords Association tells LandlordZONE that it fully supports HMRC’s Let Property campaign, adding: “Those who evade the taxes they should be paying serve only to undercut responsible landlords and tarnish the reputation of the sector.”

7 COMMENTS

  1. brixit. corona……they will look for any which way they can to get money from people. change laws. grab your savings. money running out. taxes will jump substatially to feed the army of free loaders in the social welfare state. packup and move business abroad . dont cry later…..didnt warn you. come back when storm has passed.

  2. Isn’t it about time the industry as a whole, not just Landlordzone, starting calling the government out on their outright lies. MTD will not “.. make it easier for landlords to get their tax right, saving time …”, for me – it’s already easy for me to do that (at least for our lettings business).
    Nor is “to see, close to real time, the health of their finances” valid. I know what our finances are without looking at at a computer screen. Our finances are simple, we work on a cash basis, and I know how we are doing. Unfortunately, our rental income is a little over the MTD threshold – so I will have the expense of using software I don’t currently use, have to spend a lot of time both learning how to use it and in setting it up, and for zero benefit (for me or the tax man). So it will make it harder for me to get my tax right, it will take me more time to do my accounts, and it will not help in the slightest regarding knowing how my business is doing. And as a bonus – it will actually reduce the tax take as the cost of the software will be tax deductable business expense.

    • Simon you have perfectly described my own situation and I suspect every other landlord who will be caught by this draconian change. I totally agree with you.

  3. I fully agree with Simon. As a landlord with very few properties I have No problem keeping track of my finances. I also use cash basis for my accounts & have crystal clarity when I come to fill in my tax return. I dread having to use commercial software & submit quarterly returns. Perhaps fine for big time Landlords but a nightmare for those with small portfolios who are often in the older age bracket who find new methods fruitless & a worrying challenge.

  4. So what is HMRC going to do about the £9 billion in losses per year that tenants cause LL!?

    If Govt ensured feckless tenants were forced to pay their rent arrears then I imagine tax on £9 billion would be quite a bit.

    If feckless tenants don’t pay rent then that means the taxpayer has to take up the slack.

    I’m sure the hard workers in society will be delighted to know that their taxes are effectively subsidising feckless tenants

  5. Heartedly agree with J Hobbs as current system of filing in my tax return annually works perfectly for me and just getting my head round the new EPC and electrical certificate laws. To have to buy, understand and use this commercial software sounds just a bit too much for me!

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