A crackdown by the HM Revenue and Customs on the buy-to-let sector has seen a 145% rise in the number of landlords declaring unpaid tax in the last financial year.
The number of landlords admitting to not paying tax on rental income rose from 6,600 in 2017/18 to 16,110 in 2018/19 thanks to an initiative by HMRC which encouraged landlords to declare their income.
HMRC launched the Let Property Campaign in April – a kind of tax amnesty – which gave buy-to-let landlords the opportunity to disclose any unpaid tax with reduced penalties.
After disclosing income to HMRC, landlords have 90 days to work out and pay what they owe. Landlords who do not declare all their rental income could face a fine of up to 200% of the undeclared revenue.
The scheme seems to have paid dividends for HMRC – additional taxes collected by HMRC from buy-to-let landlords who admitted to unpaid tax on their rental income more than doubled over the corresponding period, from £21m to £42m.
Mark Giddens, a partner at accountancy firm UHY Hacker Young, commented: “HMRC sees the buy-to-let market as a source of hundreds of millions of pounds of unpaid tax.
“The amount collected just from landlords coming in from the cold suggests they may not be too far wrong with that estimate.”