The Impacts on Landlords

Whilst the objective of selective licensing is to improve the private rented market, it does cause significant tax risk and issues for landlords.

The register of landlords that will be maintained by Birmingham City Council will be accessible by HMRC. This will give HMRC a database of landlords with rental income which will allow them to easily see which landlords are not declaring rental income via their personal tax returns.

If a taxpayer is prompted by HMRC regarding undeclared property rental income, the taxpayer can be subject to significant penalties for tax not paid not to mention professional fees incurred in corresponding with HMRC. Some cases can run for years.

If you have undeclared property rental income, we recommend that you undertake a voluntary declaration before being promoted by HMRC. This will allow you to limit the penalties that you incur and also avoid significant professional fees in defending a compliance review by HMRC.

It is only a matter of time before HMRC contact non-compliant landlords – so please do act.

At HUSA Accountants, we have a wealth of experience in dealing with property landlords. We can advise you and help you navigate through the process of voluntarily declaring undeclared rental income. Feel free to contact us for a no-obligation consultation with one of our experienced property tax experts.

Exemptions

If your property is licensed as a HMO you will not need a new selective license. You also will not need a license if tour property is directly managed by an educational establishment or let by a registered social landlord, like a housing association.

When The Scheme is Enforced

Landlords will have the time to apply for this license as the scheme is enforced from 4 September 2023. If you don’t have a license, you will be taken to court. Here you could receive a fine or have to repay rent to any tenants in your unlicensed property.

For more information about landlord licensing, reach out to our team at HUSA for advice and assistance with landlord tax, and finances.

To apply for a license, click the link below for Birmingham City Council:

https://www.birmingham.gov.uk/info/20175/private_housing/2649/selective_licensing/3