Let property disclosure

THEFIZZ

Hi, please be nice as I am Stressing big time. 

When my mother died I used mines & my daughters inheritance to purchase a property that my daughter will live in when she’s older. 

I have rented it out through a local authority  letting agent since June 2018. In my ignorance I have not declared this as income. (After management fees I get £400 a month)

I am an employee earning just under the tax threshold for these years.  

Today I received a letter from hmrc offering me a disclosure. I have replied and of course will pay whatever is due. 

That is what I’m worrying about, how much is it likely to be? And what will the penalty be? 
I am aware I have been foolish, but I honestly never thought. 

I am not financially well off but I will pay my dues. 

Dazed_and_C0nfused

I am an employee earning just under the tax threshold for these years.  

Unless you are Scottish resident for tax purposes the simplest option is to assume it will be £80/month (£400 x 20%) for the period to 5 April 2021.

You may simply need to complete a Self Assessment return for 2021:22 onwards.

Interest, although at a relatively low rate, will no doubt be payable from the standard HMRC dates i.e. for 2018:19 the tax should have been paid by 31 January 2020.

Penalties will in part depend on how you respond to HMRC.  Some useful information here,

https://www.gov.uk/government/publications/compliance-checks-penalties-for-failure-to-notify-ccfs11

Countrysider

Try a BTL calculator to see what tax you should have paid over that period, given your salary and allowable expenses. 

Also, if you're just under the tax threshold and your daughter is a child (as you imply) - then presumably you're getting full Child Benefit? You might have to consider if the High Income Child Benefit Charge should have been paid during the period.

HMRC might care about the CB cost or they might not have worked that bit out. I'm more disappointed that it took them almost 4 years to find a non tax paying landlord who was renting to a local authority. You'd think the LA / HMRC would have found out much sooner given they have landlord registers
 

Dazed_and_C0nfused

Also, if you're just under the tax threshold and your daughter is a child (as you imply) - then presumably you're getting full Child Benefit? You might have to consider if the High Income Child Benefit Charge should have been paid during the period.

I don't see anything the op has posted point to the HICBC being relevant.

They are seemingly receiving £4,800/year in rental profit and have a small amount of unused Personal Allowance available so a long way short of having adjusted net income in excess of £50k. 

Unless there is something significant the op hasn't disclosed.

THEFIZZ

Thanks, I am in Scotland 

Dazed_and_C0nfused

In which case part of the rental profit will be taxed at 19% not 20%.

Won't make much difference but it will save you a little bit of tax. And therefore a tiny bit of interest.  And a slightly lower penalty.

Jeremy535897

Please clarify who owns the property. Is it just you, or you and your daughter? Presumably there is no mortgage? Were there any other expenses, apart from the agent's fees?

Countrysider

Dazed_and_C0nfused said:

Also, if you're just under the tax threshold and your daughter is a child (as you imply) - then presumably you're getting full Child Benefit? You might have to consider if the High Income Child Benefit Charge should have been paid during the period.

I don't see anything the op has posted point to the HICBC being relevant.

They are seemingly receiving £4,800/year in rental profit and have a small amount of unused Personal Allowance available so a long way short of having adjusted net income in excess of £50k. 

Unless there is something significant the op hasn't disclosed.

 I read this bit

I am an employee earning just under the tax threshold for these years.  

To mean 'earning just under £50K'. If the OP means they're earning under the personal allowance, then yes they're way under the amount to be considered for the higher CB charge. However if their income from employment is that low then presumably they are in receipt of Universal Credit given they have a child, and i'm assuming this rental income was also not declared for the purposes of UC entitlement. 

THEFIZZ

My daughter is 20, I have not received child benefit for a few years 

THEFIZZ

Just myself as homeowner. No mortgage. No other outgoings. 

I do pay a management fee each month of £40. 

THEFIZZ

I earn around £12k a year. I am
not and never have been in receipt of any benefits. 

It was an oversight that rental income not declared.