Are you educated about Rental Income

HMRC have launched an online tutorial as part of their Let Property campaign. This is part of a focus by HMRC on individuals that let out residential property and do not declare tax on the earnings. The online modules cover issues such as when property letting is classed as starting from, the various types of property income such as holiday lets, rent a room etc. and how these are taxed. HMRC will also be contacting around 40,000 landlords to enquiry about their tax affairs.

 

Whilst this might not seem to have immediate VAT implications it is likely that any tax investigations that collect information for direct tax purposes will feed the same information across to VAT inspectors. This could result in assessments for VAT interest and penalty charges where individuals or businesses have either:

 

·         Recovered VAT in error on costs used to generate exempt income from residential lettings , or

·         Treated income from VATable property rental such as holiday lets as VAT free resulting in an under declaration of VAT.

 

Given that many individuals now invest in property as their pension this could result in a large number of individuals suddenly having an exposure to VAT. To find out more about the Let Property campaign here - www.gov.uk/let-property-campaign

 

If you or your clients have property rental that is treated as VAT free and have recovered VAT on related costs, or have income from property rental of anything other than unfurnished rooms/properties it would be worth giving our VAT helpline a call to check that there is no unexpected VAT consequences from this income.

None

Read Next Blog Post

Close
Get in Touch