SOUTH WEST LANDLORDS SELLING UP NEED TO SORT TAX AFFAIRS

Private landlords in the South West looking to sell all or part of their property portfolio as inflation and high bank rates take a grip need to be careful over their tax affairs.

Property and tax specialists have warned that the sale of properties that have previously been let need to be carefully handled and disclosures made under HMRCs Let Property Campaign to ensure they do not fall foul of tax penalties.

Chartered surveyor, Andrew Simmonds, who runs Parker’s Estate Agency in North Somerset and Country Property in Chipping Sodbury said: “There are an increasing number of landlords looking to either get out of the market or sell some of their portfolio at the moment.

“Inflation and the cost of borrowing being at its highest for 14 years has made many landlords consider the future. They are looking at all aspects of being a landlord. Some are looking to increase rents – but that may mean they risk losing tenants; some are looking for better mortgage deals and others are decreasing the number of properties they let out.

“With Capital Gains Tax annual exemption dropping from £12,300 to £6,000 at the start of the new tax year there is currently a rush to sell. But as soon as you sell you are likely to alert HMRC to look at your tax affairs.”

Chartered Tax Adviser, Cate Jackson, of Edge Tax Professional Services in Bristol, said: “HMRC’s Let Property Campaign provides landlords who owe more tax from the letting of residential property, in the UK or overseas, an opportunity to rectify mistakes in previous years and bring their tax returns up to date.

“Capital Gains Tax is calculated after income tax and as most people do not know their total level of income during the year, the CGT return is usually an estimate with a final calculation being provided with the individuals self assessment tax return.

“The Let Property Campaign has been running for 10 years and is a way for landlords to voluntarily come forward and declare income. There are high penalties for not declaring income and HMRC can piece together information from the Land Registry, electoral roll, utility providers and other publicly available information to check up.

“We would urge all landlords making significant changes to their property holdings to discuss their plans with property and tax specialists to ensure they do not fall foul of penalties.”

Andrew Simmonds can be contacted through Parker’s Estate Agents. Cate Jackson, who manages tax issues, can be contacted at Edge Tax Specialists.