Landlords and tax | Landlords urged to pay correct tax levels
A recent survey has indicated that the number of buy-to-let mortgage applications has soared to its highest peak in 18 months. However, whilst you may be keen to become a landlord and are using Charlton Grace in Basingstoke to find the perfect property, you must ensure that the correct tax returns are made or risk facing stiff penalties from HM Revenue & Customs (HMRC).
In 2012, HMRC has made a number of statements that it is to crack down on tax avoidance more than ever before, and if you have property to let then this could mean that you are in the firing line. Any income made from rental properties is tax deductible, meaning that you will have to provide a self-assessment each year to ensure that you fall within tax regulations. The only exception to this rule is if you have a tenant living within your own house who is paying under £4,250 a year. If the tenant is paying anything over this sum, the extra income also becomes tax deductible.
Exchequer Secretary David Gauke said that the current HMRC taskforces was expecting to collect in excess of £50m. “We have made it clear that we will not tolerate tax evasion – everyone needs to pay the taxes they owe in full. We are determined to crack down on the minority who choose to break the rules,” he said.
If you have property to let, making sure that you are paying tax is vital. Whilst you might think that you could gain more income by acting outside of the rules, the severe penalties and fines imposed if you are caught are likely to be far more expensive that paying the tax that you owe.
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