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November 6

2018
by Samantha Altman
Licensed landlords face tax checks

Tax checks on landlords applying for licences to rent out private homes are on the way, according to a footnote in documents published with Chancellor Phillip Hammond’s Budget 2018 speech.

In just a couple of sentences, the Budget Red Book confirms the government may include the new law in the upcoming Finance Bill 2019-20.

The measure is a follow-up to a consultation published in December 2017. The consultation ‘Tackling the hidden economy: public sector licensing’ calls for councils to check with HM Revenue & Customs that landlords registering for licensing schemes are paying the right taxes.

“Applying conditionality to HMO licences could support existing HMRC compliance activity by helping and encouraging more landlords to ensure they are compliant with tax laws before renting out properties,” the consultation said.

The law will apply to houses in multiple occupation and all private homes in selective licensing zones.

“Applicants would need to provide proof they are correctly registered for tax to be granted licences. This would make it more difficult to operate in the hidden economy, helping to level the playing field for compliant businesses,” says the Budget 2018 Red Book.

Separately, the Red Book also confirms a policy U-turn for the Rent A Room scheme.

In a bid to stop owners claiming the tax break when renting out their homes to tourists through online platforms like AirBnB, the government wanted to apply a shared occupancy test showing the owner lived in the property at the same time rooms were rented out.

But the policy has been dropped.

“Following consultation on draft legislation, to maintain the simplicity of the system the government will not include legislation for the shared occupancy test in the Finance Bill 2018-19. The government will retain the existing qualifying test of letting in a main or only residence, and will work with stakeholders to ensure that the rules around the relief are clearly understood,” says the book.

Read more about the latest budget announcement here.

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