The Accidental Landlord
More and more people are renting out their property to cover increasing bills or mortgage costs or through an unwillingness to sell it at a loss.
As such, the state of the housing market over the last few years has meant an increasing number of people have become ‘accidental landlords’.
Whether you are renting out your whole property or just taking a lodger, many people don’t realise they need to pay tax on the income they receive.
For those used to having their tax deducted from their pay, the requirement to submit a tax return at the end of the year may seem daunting but fear not – with the right advice and guidance it does not need to be as stressful as you might imagine.
You may have been renting out a property for several years, unaware you had to pay tax on the income.
You may be wondering if you owe HMRC lots of tax – and whether there will be penalties to pay, since you have not declared anything.
In our experience HMRC will be understanding in this situation and are unlikely to impose penalties for a failure to notify (that is, to let them know that there is a tax return due). However, there will be interest to pay on any unpaid tax.
There may even be no tax to pay after expenses have been deducted and allowances – such as wear and tear allowance or rent a room relief – are applied. You’d be amazed how much tax you could save if you play your cards right.
We’d advise you go and visit a chartered accountant – they can guide you through the process, answer any of your questions, deal with HMRC and ensure you do not miss anything you could be claiming.