If you want to hide your source of income tax from HMRC when buying a property, this is almost impossible.

For property rental investors, actively reporting rental income tax is something you need to comply with.

For HMRC, any source of income should be well-documented and documented.

You may also be interested in this article: Proof of Funds When You Buying a Property


How HMRC is tracking tax evaders


Overseas investors evading tax in the UK have quadrupled compared to last year, with many of them hiding their rental income and failing to pay tax, the latest survey shows.

Today, more and more overseas investors are turning their attention to British real estate.

Many new UK developments have become hot investment projects.

None of this escapes HMRC’s tracking, however.

Big data systems can quickly trace tax evaders’ sources of income and send letters to those they suspect.

HMRC has been using the CRS to collect UK property information from overseas investors from other government tax authorities to further verify the source of funds.

Not only that, currently well-known online real estate agencies and traditional leasing agencies are obliged to provide HMRC with rental properties and even landlord details.

The data will be used to check investor filings through HMRC’s tracking system.

Once found, how will you be punished?


How HMRC decides the proportion of punishment depends on the individual’s behaviour.

Reasonable Care: Legally compliant declaration but for some reason there is a deviation error.

Careless: A mistake caused by accidentally omitting a piece of information.

Deliberate: Non-compliant declarations, deliberately falsely reporting income, etc.

Deliberate and Concealed: Not only does it fail to declare compliance, it also deliberately conceals or conceals income.

Often, those who voluntarily disclose tend to face less severe penalties.


How to report rental income tax

First, tax residents in the UK are obliged to pay personal income tax on rental income.

Real estate purchased in the name of a non-UK tax resident is also subject to personal income tax.

If you are not yet aware of personal income tax, please refer to our previous article.

Rental income is counted as part of your income, so it is subject to personal income tax along with other income.

Secondly, the rental declaration is required to submit an annual Self-assessment tax return for declaration.

  • Paper declarations need to be completed by October 31 of each year
  • The online application must be completed by January 31 of the following year

Follow the link to the government website for a real-time online assessment and learn about late filing fines. 

Special expenses tax credit

At present, special expenses mainly include lawyer/accounting fees, property fees, municipal taxes and house water and electricity fees involved in the purchase of real estate and other miscellaneous expenses to maintain the operation of the house.

Airfare is also counted as part of the expense if the owner is overseas and needs to come to the UK to inspect the property.

At the same time, the cost of replacing old equipment with furniture and appliances can also be counted as a tax credit.

As clients’ situations vary widely, you can also consult our professional team to evaluate and optimize your assets to avoid unnecessary fines.