Is your landlord paying tax on your rent?

In a report published earlier this year by TaxWatch,

they estimate that we are probably losing about £1.7billion every year from landlords who don’t declare their rental income for tax purposes. That could be contributing to the economy such as building a few decent, energy efficient social rented homes. 

But what is HMRC doing to address this?

There is a lot of guidance to landlords on the Government’s website explaining how landlords can

declare their rental income and how to work out the tax that they owe. This is helpful to honest landlords, but of course it will not be heeded by landlords who don’t plan to declare their rental income for tax purposes. 

Tell-tale signs that landlords may not be declaring their rental income include the failure to issue any rent statements to tenants, even when they specifically request these. Another sign might be where tenants are asked to pay rent into an account in a name which doesn’t appear to be the account of the landlord or an agent, or where the landlord repeatedly asks you to pay money into a different account. The most likely sign is those landlords who insist on being paid in cash. 

The above practices do not prove that the landlord is guilty of tax evasion. But if you suspect that they may be, there is a government webpage for reporting tax fraud or avoidance. This allows you to submit details (in confidence and anonymously). Of course, you will never know the outcome, but we must hope that at least some of these reports are investigated. 

Incidentally, the total amount lost every year due to non-payment of tax due from all sources is reckoned to be 5% of the total owed – that’s a hefty £42 billion. Now that could fill the black hole in the Government’s finances that is causing all the cutbacks on much needed services. 

Why not raise this with your local MP and suggest that they start asking questions about this in the House of Commons?