If you’ve never reported rental income, then HMRC’s Let Property Campaign (LPC) is your chance to come clean about undeclared rental income. Using the LPC, landlords can get things right and also escape harsher penalties. Let’s see how the LPC works and how you can benefit.
What is HMRC’s Let Property Campaign?
The HMRC LPC is a voluntary disclosure initiative aimed at landlords who have not fully disclosed rental income to HMRC. Whether you’ve underreported or completely missed declaring income from rental properties, this campaign provides an opportunity to correct past mistakes without facing severe penalties or legal consequences.
The LPC applies to all types of residential let rental income, including the UK and overseas rental properties. Landlords disclosing under the LPC can be eligible for reduced penalties based on disclosure levels, while those who fail to take advantage of the arrangement can incur a higher penalty, or even a criminal prosecution, for non-compliance.
How the LPC Works
It’s easy: landlords with untaxed rental profits just ring HMRC and volunteer. HMRC then offers a reduced penalty scheme and the opportunity to pay any tax owed. It’s a short-term initiative, so landlords need to act quickly while it’s still an option.
When preparing an LPC, landlords have to report information about the income left out, calculate the amount of tax due, and pay. Depending on the gravity of the mistake, fines might be drastically reduced, especially if the disclosure is made early.
Procedure to Declare Rental Income Declaration Using LPC
- Calculate Undeclared Income: First, examine your rental income records and calculate what income had not been reported to HMRC.
- Calculate the Tax Due: Once you’ve calculated your undeclared income, calculate the tax owed, taking into account any deductible expenses that can be claimed against your taxable profit, i.e., repairs and maintenance.
- Telephone HMRC: Phone HMRC to begin the process of making a voluntary disclosure. It can be completed online or by filling in the relevant forms. HMRC will tell you what to do next.
- Submit Your Disclosure: Complete the necessary paperwork and submit it to HMRC. Be sure to include all relevant details and calculations.
- Pay the Tax and Penalties: After submitting your disclosure, you’ll need to pay the taxes owed along with any applicable penalties. If you’re making a full disclosure, penalties may be significantly reduced.
Conclusion
The HMRC Let Property Campaign represents a wonderful opportunity for landlords to come forward on any undeclared rental income and not face devastating penalties. Through coming forward voluntarily, landlords will be able to confirm that they are tax compliant and not facing long-term legal consequences.