How do I tell HMRC about undeclared rental income
When your parents or grandparents have to move into a care home the dilemma for many families is how they are to afford the fees that such a requirement dictates.
Rent
One of the most common answers to this dilemma is to rent out the residential property that their loved one has moved away from. This will generate a monthly income, which will subsequently help to fund the fees, sometimes entirely. However, what is not always at the forethought of the debate is the tax implications that surround such rental income.
Self Assessment
As the deeds to the house have not exchanged hands, the rental income is recognised as taxable income upon the person who owns the property. Consequently, renting out your parent’s or grandparent’s home may require registering them for self-assessment, if they had not previously done so, and definitely will need disclosing to HMRC. The tax will also need to be paid on any profits.
Handling the affairs
Unfortunately for many, those in a care home may be unable to deal with these affairs themselves and an election will need to be held in order to direct correspondence to the ‘deputies,’ or personal representative of the affairs. This will,
If however, you have failed to meet the requirements to date, HMRC has designed the Let Property Campaign in order for members of the public with undeclared rental income to make a voluntary disclosure of the backdated profits. As a result, declaring the income through the Let Property Campaign should reduce the penalties that you will incur for the late filing and late payment of the tax due to the voluntary nature of the disclosure. Once the disclosure is made you’ll then have 90 days to calculate and pay what you owe.
The Let Property Campaign is also available if you have undeclared rental income from renting out your own second property, multiple properties, a room in your own home for more than the Rent a Room Scheme threshold, living abroad and renting out your UK property, renting an overseas property, or renting out a holiday home. You cannot use this scheme to declare undisclosed income if you are a company, a trust renting out residential property, or if you are renting out commercial property.
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In the corporate world, sometimes things aren’t exactly black and white when it comes to accounting procedures.
George W. Bush
