Thousands of landlords have confessed that they have not paid enough tax, says HM Revenue & Customs.
More than 16,000 landlords admitted they had paid too little in the 2017-18 tax year – the last year with available records, HMRC data shows.
That was a 145 per cent increase from 6,600 to 14,110 in just 12 months, while the amount of unpaid tax doubled from £21 million to £42 million over the same period.
Tax experts suggest the high level of landlords reporting unpaid tax is due to HMRC’s let property campaign.
Over the past six years, the campaign has offered landlords advantageous penalties if they disclose their wrongdoing instead of waiting for HMRC to catch them out.
At the start of the campaign in 2013, HMRC believed that as many as 1.5 million landlords were avoiding tax of up to £500 million a year, however current HMRC statistics seem to show around 50,000 landlords have handed over £127 million since 2013.
“HMRC’s attention on buy-to-let landlords is clearly intensifying, as the buy-to-let market is becoming a key source of unpaid tax,” said accountant Mark Giddens, partner at UHY Hacker Young.
“Under-declaring rental income and failing to pay capital gains tax on the sale of buy-to-let homes has seen some landlords slapped with heavy penalties and even sentenced to prison.
“Landlords are wise to contact HMRC and declare unpaid taxes, rather than facing big fines and possible criminal prosecution.
“HMRC is now ignoring the heavy administrative work involved in establishing and prosecuting tax fraud and showing their intent to expose any buy-to-let landlords that ignore their tax duties.”
For more information on your current tax obligations as a landlord read ‘Taxes for UK landlords: The complete guide for 2019/20’.