Recent research by London accountancy firm UHY Hacker Young showed that HMRC took £2.02bn in income tax on the rental homes of buy-to-let investors in 2010/11, up 13% from £1.78bn the previous year. Also revealed was the increase in the number of Britons with direct investments in let property, rising from 1.8m to 1.9m.
With the buy-to-let sector becoming an increasingly valued source of tax revenue, HMRC is going all-out to track down private landlords who evade tax due on rental income or from the sale of buy-to-let property. Two dedicated taskforces – one in Yorkshire, the other in the South-East – are currently operating in the hunt for unpaid tax.
HMRC is running a ‘Property Sales Campaign’, which gives investors until 6 September to voluntarily disclose and pay any unpaid tax resulting from a sale of a second home. When the deadline passes, HMRC are expected to take the gloves off and come down hard on BTL investors found tax dodging, whether or not they understand their tax reporting obligations, which is of particular concern among expat landlords.
Richard Way, editor at the Overseas Guides Company, said, “The best advice right now for an expat landlord who is unsure of their tax affairs is to seek advice from a tax advisor… before it is too late.”