HMRC warns landlords over tax

26 September 2008

HM Revenue and Customs (HMRC) has sent out letters to owners of buy-to-let properties reminding them that they need to pay the correct amount of tax on their rental income.

With the buy-to-let market soaring in recent years, it has been thought that a number of landlords have not fully grasped the taxation rules that apply to their investments.

Under the rules, only the interest that is paid on a buy-to-let mortgage can be set against tax, not the full amount of the cost of the repayments.

The letter points out that, as from April next year, HMRC officers will have additional powers, allowing them to inspect landlords’ records in their home premises.

It is thought, however, that a home visit will only be prompted in the most serious instances.

The development of the buy-to-let market has seen the number of landlords rise from 120,000 in 2000 to the present one million.