Her Majesties Revenue and Customs (HMRC) estimate that more than 30% of UK private rental sector landlords are evading paying any tax on their rental income at a cost of £550 Million (GBP) to British taxpayers.
HMRC reckon that approximately 1 million PRS landlords failed to declare any revenue from their UK rental properties in the past tax year, compared with 1.9 million PRS landlords who paid over 1.8 Billion (GBP) in tax on their rental incomes over the same time frame.
The estimate has been disclosed by HM Revenue and Customs to highlight widespread tax evasion by UK private rented sector landlords.
According to HMRC, one in three PRS landlords are failing to declare any rental income from buy to let property, and the amounts undeclared are equal to a quarter of all the tax due from rental income in the UK.
The tax dodging landlords could face a major crackdown from HM Revenue and Customs this year, as HMRC insist that the UK private rented sector is ripe for further investigation because the £550 Million (GBP) is money that they should have.
Richard Murphy, an accountant and co-founder of the campaign group Tax Justice Network, said: “The HMRC should get a grip on the problem. This has long been known as an area where people do not fully declare rental income. If landlords are not asked, they do not declare it.”
Landlords not signed up to the tax self assessment scheme are supposed to declare all rental income by October 5th the following tax year.
HMRC said: ‘The majority of UK buy-to-let landlords do pay what the law requires and evasion is far from endemic, however if rental income is made then landlords need to declare it.
Tax evasion in the UK is now very high risk as the Government has made almost £1 Billion (GBP) available to enable HMRC to tackle tax evasion and avoidance by PRS landlords.
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