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Gordon’s latest buy-to-let tax grab!

It seems that Gordon Brown is leaving no stone unturned in his quest to squeeze every last drop of tax out of savers and investors, with around 200,000 people having already been sent a letter from HM Revenue & Customs over unpaid taxes on their offshore savings account. Now however, buy-to-let investors are next up on Gordon Brown’s hit list as he tries to extract as much tax as possible to boost revenue for the Treasury.

HM Revenue & Customs is preparing to clamp down on around 80,000 buy-to-let property owners who may have:

• Not paid enough tax.
• Claimed too much tax relief.
• Failed to declare the amount of rent they receive from the property.
• Made a capital gain made on the sale of the property.

The Revenue can claw back unpaid tax from as far back as six years, which means that some of those who have bought buy to let properties could face tax bills so large that they may have to sell their property.

The Association of Chartered Certified Accountants has urged the Revenue to use a light touch, stating: “Buy-to-let investors are generally not tax evaders. Many think the mortgage interest is at such a level that it covers the rental income and that they don’t have any additional tax to pay on their property. But the tax situation is so complex they may well have to pay tax on any buy-to-let property investment.”

There are more than 400,000 buy to-let-landlords in Britain, and in total they are facing a capital gains tax bill of more than £4.1 billion, with each landlord facing an average bill of £48,600 based on 2006 housing prices. Let’s hope the cost to the buy-to-let industry is not too great.