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.

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.

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.