The Daily Telegraph reports that the taxman is cashing in with related tax revenues of £2bn per annum. The buy to let tax take is up 13% year on year and the number of property investors is a staggering 1.9m.
There is a downside to this windfall for the taxman. The popularity of buy to let has prompted HMRC to clamp down on the sector. A special tax force has been set up to tackle property tax cheats. Top 20 accounting firm Hacker & Young predict HMRC will become 'far more aggressive in pursuing undeclared rents and disposals'.
Taxpayers who calculate their tax due accurately under the 'self assessment' regime and file their tax returns in good time have nothing to worry about. Those who have dealt with their own tax affairs to date may want to think about engaging a professional advisor to help ensure their computations are accurate and they are claiming all relevant allowances and reliefs. With property disposals in particular there can be some complexity in the computations and an advisor can help ensure that only the right amount of tax is paid.
In our own accountancy practice where we deal predominantly with business accounts and tax work we have seen a significant increase in the amount of buy to let work we do for clients. There is some comfort for people who have been slow to deal with their buy to let tax administration. We have worked successfully with several clients who were several years behind with their tax returns. Working closely with HMRC we have brought the clients' tax affairs up to date and achieved positive outcomes for the taxpayers.