Common Landlords’ Tax errors

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HMRC Publish example of common Landlord errors on their website as below:-
Don’t make a mistake with your rental property or forget to declare it!
See what HMRC think of mistakes commonly made below that arise from many family circumstances :-

Moving in together

Beena moved into her partner’s flat several years ago, and decided to rent out her own property rather than sell it. Beena didn’t think she was making a profit which needed to be taxed, because the rental income just covered the mortgage payments.

When working out her rental profit, Beena needs to be aware that the only allowable expense for her mortgage is the interest amount of her mortgage repayment.s

NB So don’t over-claim or assume that you don’t owe tax when you might!

Inheriting a property

Winston inherits a house and decides to rent it out rather than sell it. He uses a local letting agent to find him a tenant and collect the rent on his behalf. The agents also organise any repairs to the property, deducting the costs from the monthly rent they collect.

Winston has been renting the house out for several years, but didn’t realise he should be declaring his rental profits to HMRC.


NB HMRC gather information from a myriad of places like letting agents to see who is renting out property !


Property bought as an investment

Sharifa invested in a property to rent out. She wasn’t aware that renting out a house might involve paying extra tax.

Sharifa can use HMRC guidance to work out if she is making a profit from her rental income. She will need to declare any rental profit to HMRC.


She also needs to consider Capital Gains Tax if she sells the property.


NB Private residence relief is available on your main residence only so beware



Carl and Suzy jointly own their house and are getting divorced. They decide to rent out their jointly owned house and both move into smaller properties.

Carl and Suzy agree to use a letting agent to find a tenant and collect the rent.

NB Carl and Suzy need to call an adviser to learn how to declare their own share of their rental profits to HMRC.



Ketan and Priya are married and own a house together. They moved to another area because of their work and rented out their house. They didn’t tell HMRC about their rental profit.

Ketan and Priya have now been renting their house out for three years, and never got around to declaring their rental profit to HMRC.

Both Ketan and Priya need to declare their own share of their rental profits to HMRC.


NB Penalties will arise for a non-declaration


Care home

Brenda has moved into a residential care home, and in order to pay the care home fees she rents out the house she owns through a letting agency.

All of the rental profit she receives goes towards her care home fees. Because of this, Brenda mistakenly doesn’t see her rental profit as taxable income.

NB This is a taxable rent situation so contact your friendly tax adviser for help

HMRC’s Website and property manual contain lots of interesting advice but for a quick cost-effective resolution, pick up the phone and Lindsay will answer your questions on 07584 706664 in confidence

The cheaper option of the HMRC Let Property Campaign may be right up your street!


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