HMRC Rental Income Investigations

Recently, we have been hearing from our new and existing clients about letters they received from HMRC to investigate if they have been getting property income without declaring.

HMRC currently employs a system to investigate rental property income that hasn’t been declared by taxpayers. This process is part of their commitment to ensuring compliance with tax regulations and maintaining a fair and transparent tax system. HMRC utilises information from third parties and open-source materials, such as from news, social media, Companies House, Land Registry etc. to identify discrepancies in individuals’ tax declarations.

In cases where rental property income is suspected to be undeclared, HMRC initiates investigations, but first they will contact you to confirm in writing whether you have or have not received property income.

Depending on the information you provide, HMRC will decide how to proceed. Obviously, failure to comply with tax regulations and declare rental income can result in penalties, fines, and legal consequences.

If you have received a letter from HMRC and unsure what to do next, get in touch with us as soon as possible. We understand that it can cause some anxiety but rest assured, we would be able to provide you with the best support and advice how to proceed.

With decreasing inflation, savers now have the opportunity to secure an interest rate that surpasses the rate of rising prices. Nevertheless, the search for fixed-rate savings accounts offering over 6% has become futile, and experts caution that the most favourable deals may quickly reach full subscription. Act swiftly to capitalise on the current market dynamics and secure the best returns on your savings.

As always, get in touch with us if you more information and advice. We are based in West London but happy to work with clients everywhere!

Registering for Self Assessment is an essential requirement by HMRC with an untaxed income, and we can help you to complete it. You can trust our expertise and experience to navigate the process smoothly, ensuring compliance while saving you time and hassle.

With our simplified approach – whether you want to visit us in our West London offices covering Acton, Ealing, Chiswick and other areas, or over the phone or online –  registering for Self Assessment has never been easier.

You can file your Self Assessment tax return online if you:

• are self-employed
• are not self-employed but you still send a tax return, for example because you receive income from renting out a property

The deadline for the last financial year has just passed, but don’t wait long to prepare for Self-Assessment this year. Contact us to get started!

If you are unsure if you need to submit a Self Assessment tax return, get in touch with us for help. We work with clients in West London, including Acton, Hammersmith, Chiswick, Ealing, Hanwell and any surrounding areas and have experience in all accounting matters.

You can also check HMRC’s online tool to check if you have to return your tax assessment.

Normally, you need to complete tax return if:

• are newly self-employed and have earned more than £1,000
• have multiple sources of income
• have received any untaxed income, for example earning money for creating online content
• earn more than £100,000 a year
• earn income from property that they own and rent out
• are a new partner in a business partnership
• are claiming Child Benefit and they or their partner have an income above £50,000
• receive interest from banks and building societies (more than £10,000)
• receive dividends in excess of £10,000
• need to pay Capital Gains Tax
• are self-employed and earn less than £1,000 but wish to pay Class 2 NICs voluntarily to protect their entitlement to State Pension and certain benefits

If you are not sure if you fall under one or more of these categories, contact us – we are waiting to hear from you for friendly, jargon-free advice.

The Office for National Statistics has shared a link to a personal inflation calculator, which lets you see what inflation mean for your household.

It shows how prices are changing in the budget, along with rising cost of living.

You can find and track the inflation impact on your spending here.

With interest rates raising again, it has been a huge pressure on borrowers and anyone trying to get on the property ladder. There are some good resources available if you want to understand more about mortgages, We would recommend checking this article from The Guardian, about interest-only mortgages, which suggests some good avenues for getting a mortgage.

A positive news has been that struggling homeowners are to be given a year-long grace period before their home is repossessed as part of a agreement between the government and lenders after this week’s shock interest rate rise.

The main points of the charger are:

• No home will be repossessed within 12 months of the first missed payment.

• Customers can seek advice from their lender without it affecting their credit score.

• Customers can switch to an interest-only deal for six months; or extend their mortgage term and revert back within six months if they want. Neither option requires an affordability check or will affect their credit score.

Xero accounting software has become a top choice for accountants and small business owners over the last years, offering a host of advantages, which we also recommend. Get in touch with us if you want to learn more, as we are a Xero-certified bronze partner.

The advantages of using Xero are:

• Real-time Financial Visibility:
  Access real-time financial data, effortlessly reconcile transactions, monitor cash flow, and track financial performance with automatic bank feeds.
• Simplified Invoicing and Billing:
  Create professional invoices, track payments, and send automated reminders, eliminating paperwork and streamlining billing.
• Efficient Expense Management:
  Capture, categorize, and securely store digital receipts, simplifying expense management and ensuring accurate reporting.
• Seamless Integration with Third-Party Apps:
  Integrate Xero with payment gateways, inventory management systems, and payroll solutions, with less manual data entry.
• Collaborative and Secure Environment:
  Collaborate in a secure cloud-based platform, allowing multiple users to access and work on financial data simultaneously, with robust security measures in place.
• Time and Cost Savings:
  With Xero, you’ll be saving time and reducing errors. Xero’s affordability makes it suitable for businesses of all sizes.

We would recommend that small and medium businesses embrace Xero for efficient, accurate, and time-saving accounting practices – and we’re here to guide you.

After the 12th consecutive raise, growing interest rates will cost UK mortgage holders £12bn in extra payments, which mostly hit young families.

In a report that emphasised the dramatic impact of higher borrowing costs, the Resolution Foundation said the Bank of England’s 12 consecutive rates rises since December 2021 had already cost homeowners £4.2bn, with about £8bn more in extra payments likely over the next couple of years.

More than 1.6 million homeowners are expected to re-finance the fixed rate loans this year, forcing them to pay an average £2,300 extra a year in interest payments.

It’s been a year since IR35 rules were introduced about off-payroll working rules if you engage contractors working through their own limited company.

Get in touch with us if you need to understand more how to implement the rules and how it can help your business. More information here.

HMRC gives Self Assessment taxpayers more time to ease COVID-19 pressures: After extending the self-assessment deadline to 28 February, now 1 April is the deadline to pay any outstanding tax or make a Time to Pay arrangement, to avoid a late payment penalty.

Get in touch with us if you think you have a penalty to pay or want to learn more about time to pay arrangements. More information here.