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HMRC Let Property Campaign

HMRC Let Property Campaign – have you declared your holiday letting income?

HMRC Let Property Campaign

Five years ago, we posed the following question. Whether getting the best terms on the tax you pay on your holiday letting income sounded like an attractive proposition? Our question was related to the launch of a new campaign by the Government, aptly called the Let Property Campaign.

The reason for the HMRC Let Property Campaign

In 2013 it was estimated that 1.5 million landlords had underpaid or failed to pay up to £500 million in tax between 2009 and 2010 alone. The campaign was an opportunity for those that had knowingly or inadvertently not paid (or underpaid) tax on their `buy-to-let’ and ‘furnished holiday letting income‘ to come clean and declare it without further hefty penalties.

It’s important to highlight that, whilst many pieces of legislation are aimed at ‘traditional landlords’ with Assured Shorthold Tenancies; this drive from HMRC extends to holiday homeowners and those operating within the tourism and hospitality sector. It essentially targeted anyone who owns more than one home one or more of which generate an income.

The results of the Let Property Campaign

And the results? A recent Freedom of Information request has indicated that over the past five years, 35,099 people have made a voluntary declaration to HMRC – that’s 2.6% of the people that had been identified. Wondering how much of the £500 million tax bill they were successful in recouping? £85 million (17% of the targeted figure).

The importance of being upfront with tax

While these figures are certainly not what HMRC and the Government were targeting at the original outset of the campaign, they are continuing the drive to identify those that are gaining income from properties and not declaring additional sources of revenue.

If you’ve made an error in paying or calculating your tax bill as a result of misunderstanding or deliberately paying the wrong amount, it is strongly advised that you inform HMRC of any mistakes before they discover them, because if you don’t make a voluntary disclosure now and HMRC finds out later, you could suffer higher penalties and face criminal prosecution.

You may also find the following articles of on furnished holiday letting taxation of interest:

When holiday letting your second home to paying guests it’s essential to take advice on suitable insurance. Boshers offer specialist holiday home insurance to holiday letting owners across the UK. Need an insurance quote for your holiday home or cottage complex? Please give us a call on 01237 429444.

*Please remember this article is only a general outline of the tax schemes offered by HMRC. If you are looking for tax information or advice, please contact HMRC directly or seek professional advise.

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business rates

Business Rates for self-catering accommodation

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business ratesBusiness rates for self-catering accommodation are unfortunately on the rise. If you have more than 13 beds you could be facing the biggest increase. The new rates will come into effect on 1st April 2017. The business rates revaluation have been highlighted in a recent report commissioned by The South West Tourism Alliance. This informative report highlights those with a rateable value above £12,000 may be hit with bills of between 43% and 71% higher than in 2010.

This news is disappointment to those working within the self-catering accommodation industry. It comes at a time when the Government has acknowledged that rural and coastal businesses are under pressure and in need of greater support.

We take a look at what the business rates rises means for holiday homeowners.

Who is set to be hit the hardest by the rise in business rates?

The government has hit those with the largest turnover hardest, leaving larger complexes facing the biggest increases; a self-catering business with 10 cottages that sleep six people may see a 71% increase on the business rate costs.

These new rates neglect to take into consideration the running costs of these complexes, including greater staffing levels, maintenance expenses and of course, the fact the majority will already be over the compulsory VAT registration limit.

Tables provided by The South West Tourism Alliance indicate that more than 36,000 local accommodation providers will be effected, with the bulk of those offering 1 to 4 bed spaces, and potentially paying in excess of 30% more than they were in 2010.

The effect of business rates rises

By this point owners will have set their prices for 2017 and in some cases for 2018 too. As a result, there is likely to be little room to manoeuvre when it comes to passing these costs on.

Once the full impact of the rate increases has been felt, and taking into consideration the current rate of inflation, it’s almost inevitability that prices will need to rise. This is particularly disappointing at a time when the weak pound against the Euro has made the staycation an increasingly attractive economic option for domestic travel.

The new report also highlights the large impact that the rates will have on many communities. The South West in particular has many which are reliant on seasonal tourism. Any potential drop-off in occupancy as a result of higher costs will also hit associated trades and services.

There can be no better time for us to all come together in order to collectively promote cottage holidays. We have a great product, let’s make sure everyone knows about it.

You can read the full report here: SWTA – The Impact of Business Rates rises in the Self-catering Sector

Boshers offer specialist holiday home insurance to owners across the UK. Require a quote for your holiday apartment, cottage or complex? Please give us a call on 01237 429444.

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tax investigations

Tax Investigations – What to do when the taxman knocks

tax investigationsLandlords including holiday letting owners are under scrutiny because the Revenue estimates that £500m is lost every year through underpayment of tax on rental income and undeclared capital gains on second properties.

Last year HMRC said that 40,000 landlords were suspected of bending the rules. HMRC has continued to urge property landlords and holiday letting owners to bring their tax affairs up to date.

They are encouraging holiday homeowners to close the gap by signing up to their Let Property Campaign, which allows landlords to claim the best possible terms on any outstanding tax for their holiday home, for more information please visit our blog post at:

With the website already receiving thousands of visits and many holiday homeowners having signed up to the campaign it is certainly worth exploring.

If you’re currently unsure if you have unpaid taxes for your holiday home or you should be declaring taxes under this scheme you can visit the link below:

You’ll answer a few simple questions and be given guidance that is specific to your own circumstances.

There is little doubt that if you are a regular reader of this blog you’re a conscientious holiday homeowner and declare your furnished holiday lettings income in the proper manner. However there is always the chance that you may be selected for a tax investigation, here’re a few pointers to consider if you are.

What happens if you do have a tax investigation?

  • Don’t Panic!

The first thing to do is remain calm; whilst tax investigations can be triggered by discrepancies in your numbers, they can also be carried out at random.

Tax investigations are broken down into three distinct categories; aspect, full and random. Aspect investigations will look into one or more areas of your tax, whilst full or (full) random investigations will examine your tax return in its entirety.

Each should be treated seriously and it is important to identity from the start which procedure is relevant to your enquiry.

  • Get an accountant before contacting HMRC

HMRC recommends that small business and holiday homeowners seek the advice of a professional in order to limit the potential costs an investigation could have.

It is important to take stock and be thorough. Your accountant will be able to provide the necessary information as quickly as possible, but only once they have a full understanding of your affairs.

Rushing this process or doing it without the aid of a specialist professional could lead to you incurring considerable costs should things go wrong.

  • Talk to HMRC when you are ready

You will have 60 days in which to respond to HMRC. Only when you are ready, and fully armed with all of the information you need, will it be time for your accountant to make contact.

As holiday home insurance specialists we understand the needs of holiday letting owners and our policy includes valuable legal expenses cover for HMRC tax investigations provided that the insured has taken reasonable care to submit complete tax returns within statutory time limits. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444. 

Here are some helpful links on the Furnished Holiday Letting Tax Rules:

Please note that this article gives only an overview of Tax Investigations – what to do when the taxman knocks and we suggest you take advice from a qualified professional before making any decisions in this area. 

 

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Insurance Premium Tax

HMRC Let Property Campaign

HMRC launch tax initiative open to holiday homeowners

As a holiday home owner does getting the best possible terms on the tax you have to pay on your property sound like an attractive proposition? HMRC Let Property Campaign allows those who haven’t declared letting income to do so!

HMRC Let Property CampaignWe’re currently highlighting the ‘Let Property Campaign’ being run by HM Revenue and Customs (HMRC) that is open to those renting out a holiday home to paying guests and have yet to declare the income.

How do you get the best possible terms for your tax payment?

If you currently owe tax from the letting income gained from your holiday home you’ll need to declare that income by making what is called a voluntary disclosure to HMRC. In order to gain the best possible terms for your tax on this income you’ll need to do one of two things:

  • Complete the HMRC Let Property Campaign Notification form which you can access by clicking here – HMRC Let Property Campaign 
  • Call the Let Property Campaign Helpline on 03000 514 479 to discuss your options.

Once you have consulted the helpline or submitted your notification form you’ll have three months in which to pay your tax bill.

What do you do if you’re unsure if you need to declare tax under this scheme?

If you’re currently unsure if you have unpaid taxes for your let property or if you should be declaring taxes under this scheme you can visit this link – HMRC Let Property Campaign Questionnaire

You’ll answer a few simple questions and gain guidance on what you need to do that is specific to your circumstances.

The risks of not declaring tax on your holiday letting income

If you’ve made an error in paying or calculating your tax bill as a result of misunderstanding or deliberately paying the wrong amount it is strongly advised that you inform HMRC of any mistakes before they discover them.

The HMRC are actively cracking down on tax evasion by all landlords, whether residential or in this case those who rent out holiday homes. They’ll use information they have about the property, the marketplace and other information they hold on customers to identify people who might not have paid what they owe.

If you don’t make a voluntary disclosure now and HMRC finds out later, you could suffer higher penalties and face criminal prosecution.

Please remember this article is only a general outline of the tax schemes offered by HMRC. If you are looking for tax information or advice please contact HMRC directly or seek professional advices.

Useful Links:

Learn more about HMRC tax campaigns by watching this video 

The vast majority of holiday home owners who let their property reading this will already be declaring the income received after offsetting allowable running expenses such as their holiday home insurance premium. As holiday home insurance specialists we understand the needs of holiday letting owners and our policy includes valuable legal expenses cover for HMRC taxation investigations provided that the insured has taken reasonable care to submit complete tax returns within statutory time limits. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444. 

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Furnished Holiday Lettings – read the Members of Parliament briefing

Furnished Holiday Lettings – read the Members of Parliament briefing. Under the Furnished Holiday Lettings rules, income from furnished holiday accommodation may be treated as income from a trade for tax purposes, although generally the letting of property is not a trade. In the 2009 Budget the Government announced that FHL rules would be repealed from April 2010, raising about £20m in 2011/12. Despite representation from home owners, landlords, and the tourist industry, the Government confirmed this change would go ahead in the Pre-Budget Report in December 2009. This parliamentory briefing note discusses the background to this measure. Read on here

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