Rogue residential landlords' tax evasion costing up to £1.7bn a year (Aug 2020)

  • Landlord tax evasion costing up to £1.7bn a year

  • By TaxWatch, published in August 2020

  • Abstract:

    • Tax evasion by residential landlords could be costing the British Treasury up to £1.73 billion a year, which is more than three times the amount reported for 2010, the only time official data has been published on the scale of tax evasion in the whole of the buy to let sector.

    • In 2013 the Government estimated that up to 1.5 million landlords had underpaid or failed to pay up to half a billion pounds in tax for the 2009-2010 financial year.

    • HM Revenue and Customs (HMRC) does not make a separate estimate of the proportion of the total tax gap attributable to residential landlords, but does estimate the tax gap arising from individuals in employment who have not declared and therefore not paid tax on lettings income. "The latest estimate of this tax gap was £540 million for the tax year 2018-19.”

    • However, according to the report, "tax evasion amongst self-employed landlords is rife. According to research conducted by Arun Advani of the University of Warwick, one quarter of landlords that file self-assessment returns do not declare all their income, on average not reporting 60% of their property income." That this means is that the £540m in unpaid tax is attributable to approximately only a third of the tenancies at most. "If the tax behaviour of the two thirds not ‘in employment’ is similar to those who are, and we have no reason to believe otherwise, the total tax gap is then likely to be as much as £1.73bn," states the report.

  • Keywords: UK, landlords, residential landlords, tax evasion, tax gap

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