| CATEGORY: NEWS AND ANNOUNCEMENTS |
Buy-to-let abuses targeted by taxman |
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Tue 29 May 2007
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LONDON (SHARECAST) - Thousands of buy-to-let landlords could face hefty fines and huge bills in a clampdown on unpaid tax in the sector.
Revenue & Customs has reportedly identified 80,000 landlords who have either claimed too much tax relief or failed to declare a capital gain or the right amount of rent they receive from a property.
Tax inspectors can go back six years to claim unpaid tax and potential bills for some landlords may be so large they have to sell the underlying property. In addition, Revenue & Customs can levy fines up to the value of the unpaid tax and also charge interest on money outstanding.
The move is seen as concerted effort by the government to raise revenue and to crack down on abuse in the buy-to-let market, with “ghost” landlords who have failed to declare themselves as property owners a special target.
Misuse of tax relief will also be scrutinised. Landlords can offset income tax on rents against mortgage interest if they have an interest only loan, but this relief only applies to the interest part of the mortgage not the repayment element.
Revenue & Customs will get information on landlords from banks, tenants and from letting adverts. The UK has about 400,000 buy-to-let mortgage owners with the value of buy-to-let mortgages about £95bn according to the Council of Mortgage Lenders. Landlords could face capital gains tax of more than £4.1bn, or an average bill of £48,600 based on 2006 house prices, according to one buy-to-let broker.
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