Property lettings campaign targets hidden income


HM Revenue & Customs are hoping to raise awareness of the tax arising from property ownership and letting as part of a new campaign.

HMRC believe that many people are unaware of the tax implications of receiving income from property and are hoping the campaign will redress the balance. 

The let property campaign which is due to run for the duration of 2014 will give people the chance to disclose income to HMRC on more favorable terms than would be available to them if they were subject to an enquiry from the taxman.

Many common scenarios which can create a tax liability related to property include;

Changes in relationships

By moving in which a new partner and renting out the home you previously lived in, there could be tax consequences.  Remember only mortgage interest is a tax deductible expense, not any capital element of the mortgage repayments.

Homes occupied by relatives

The money received from property owned by parents that is occupied by their adult children may be taxable.  For married couples or civil partners, there are special rules for jointly held property which means that income is usually deemed to be split 50:50 – you cannot simply allocate the income to the partner with the lowest rate of tax.

Inherited property

Income received from a property that is inherited is likely to be taxable.

Property overseas

Residents in the UK, then you are taxable on your worldwide income.  This means that if, for example, you were to let out your home abroad while you moved to the UK to find work, income from your home abroad could be taxable in the UK.

Renting a house while you work away from home

Those who have been unable to sell their homes when taking a job in a different part of the UK, may consider renting their homes whilst they rent a house near to their new job.  They may be unaware that they could be liable for tax, even if the rent received from their property is equal to the rent they pay.  From a tax point of view the rent that is paid is treated as a personal expense, but the rent  received is treated as taxable income.

The ‘rent-a-room’ scheme

This scheme exempts the first £4,250 of income from renting a room in your house to a lodger from tax.  However, if the income exceeds this, you will have a tax liability.  The rent-a-room scheme does not cover renting the whole of a house.

If you think you are liable for tax relating to property and need advice on your position, give Arcus a call on 01572 770 552.


  • Date posted:
    21/02/2014
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