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Taxman's look at rental income

7/ 4/2008

Q I have heard that the revenue is looking into landlords who have not declared rental income or profits from the sale of houses.

I have always been taxed under PAYE and don't know what, if any profit I have made. If the revenue haven't contacted me should I continue to do nothing?

A With the expansion of private landlords in recent years HM Revenue & Customs have a large database of property transactions and tenant details.

They have started to investigate landlords and can collect tax for the past 20 years.

With a maximum penalty equal to 100 per cent of any unpaid tax and criminal proceedings for the most serious cases you should seek professional advice straight away. Expenses can be deducted from the rents received including agency fees and interest paid on loans to purchase the properties.

The revenue also thinks some landlords may have incorrectly claimed repayments of the amount borrowed as an expense.

Your adviser will help work out the expenses you can claim including relevant costs of the purchase and sale of properties to ensure that you only pay the right amount of tax and help reduce any penalty charged.