On the 1^st of April 2014 legislation formally came into practice regarding the HMRC and the taking over of estate agency businesses, which comes under the Money Laundering Regulations of 2007. Previously this was supervised by the Office of Fair Trading (OFT) however, now it is the taxman that will oversee anti-money laundering supervision in regards to landlords and estate agents.

 There is also a wider issue at stake here for people who rent their properties online or with a traditional estate agent, is that Her Majesty’s Revenue and Customs are now going after landlords who have failed to declare income on their rented properties and properties for let.

The ‘Let Property Campaign’ gives landlords the chance to come clean over any undeclared income from properties they own. While they will still have to pay a penalty up to 20% of the total owed (including any interest and tax on this amount) it is a better option than a 100% fee and the possibility of being prosecuted.[1] Indeed, HMRC are also using letting agent’s records to locate landlords that are not declaring their income from rented and let properties.

That being said, David Lawrenson of Lettingfocus.com put forward the point that this failure to declare income was probably more likely to be down to the landlord not making any profit or income on the property rather than any attempts at evasion. While landlords do have to file a return regardless of whether they make a profit or loss, for landlords that have failed to do so there is probably no income to penalize.

The biggest online estate agent I Am The Agent has also warned landlords who don’t file returns or come clean with the taxman that there are numerous ways in which the HMRC can track down landlords. The no commission estate agent warned landlords that the HMRC look through local adverts, painstakingly go through data on buy-to-let mortgages, and, as accountants UHY Hacker Young   warned, also search through internet advertisements too. Along with traditional estate agents being requested to provide records for the last year, so I Am The Agent want to ensure all their Landlords are prepared and in doing so advise discussing your property income with a Qualified Accountant or tax adviser.

Even though many people are likely to incur penalties and charges, Rita4Rent.co.uk, one of the largest rental income tax advisors online, said that most landlords could settle for around 10% of penalties fees.[2]

These new regulations and oversight by the HMRC is likely to see many landlords trawling through their books to ensure that they have declared all their income from rented and let properties. Even though landlords can claim substantial tax breaks and this totals to about £5bn combined per year in the UK for private landlords[3] there is still a need to file a return if you own property other than the one you currently live in.

At I Am The Agent we specialise in selling, renting, and letting property online and as a no commission estate agent we only charge a fixed fee. We can also help you to manage your property portfolio. If you want to let your property online then get in touch to find out more about our range of services.