HMRC have released new guidance detailing examples of tax errors that landlords make. It focuses on scenarios where people become landlords but, for various reasons, are unaware of their tax obligations.
Ten common reasons for people becoming ‘unintentional’ landlords have been identified, along with real life examples of each. These include: renting out a house when you move in with a partner, renting out an inherited property, buying a property for a family member at university and renting out the marital home after a divorce.
It’s important for people to be aware that they can still be liable to tax even if they are ‘just covering their costs’. For example, only the interest element of mortgage payments are tax deductible, not the capital repayments.
In accordance with this new guidance HMRC have an ongoing Let Property Campaign under which individuals can declare untaxed rental income.
If you wish to consider your position please do not hesitate to contact Green & Co Accountants and Tax Advisors on 01633 871122 and our tax team can assist you.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.