Opposition grows to taxing landlords at source as group claims officials ‘mulling move’

Finance professionals have joined the chorus of opposition to proposals for property sites and letting agents collecting landlords’ taxes.

The Association of Accounting Technicians (AAT) suggests government officials are still considering the idea but has come out firmly against it – either on a voluntary or compulsory basis.

Earlier this month, LandlordZONE reported how the proposed scheme had been universally panned by official focus groups.

Government researchers assessed the idea of an alternative voluntary ‘withholding process’ to UK resident landlords, whereby agents would administer and collect tax on income from properties on their behalf and pass it directly to HMRC.

In its response to the Office of Tax Simplification’s (OTS) review of property income, the trade body said that despite this research being carried out in 2016, it “inexplicably was only published last month, more than six years after taking place and AAT suspects as a result of the current OTS work in this area”.

It said the idea had a “theoretical attraction” but that a range of significant practical barriers made such an approach unlikely when an individual’s tax circumstances and expenses were factored in.

Making Tax Digital

In its response, AAT also said it believed the £10,000 Making Tax Digital (MTD) threshold was inherently unfair and unjustifiable and should match the personal allowance of £12,570, otherwise non-taxpayers would have to register for MTD and provide quarterly updates despite having no tax liability.

It added that it favoured breaking the link with the end of the tax year, instead requiring landlords to register within one month of starting letting activity.

The trade body suggested introducing some very basic minimum requirements around letting agents providing information to landlords, with landlords required to confirm receipt with their signature. This could include the sentence, ‘If you sell your rental property you may have a Capital Gains Tax liability which must be paid within 60 days of sale.’

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