110: Rental income: OTS launches consultation
The Office of Tax Simplification (OTS) has launched a consultation into the way that income from property is taxed.
Currently rental income is taxed differently from income from other investments, and it can be taxed in different ways depending on the type of property involved. Short term lets qualifying as ‘furnished holiday lettings’ are allowed more generous deductions and reliefs than longer term rentals. A further regime (the ‘rent a room scheme’) applies when individuals rent out furnished rooms in their homes.
Different methods of calculating profit can also be used for rental income of under £150,000 a year than for rental income over this amount.
The OTS is looking at whether the system could be simplified, what difficulties and benefits taxpayers find with the system as it is and whether they feel it causes any distortion in behaviour. The organisation wants to hear directly from landlords who own rental properties in the UK or abroad, whether through companies or directly, from small businesses that do so and from their professional advisers and representative bodies.
The review is also asking about views and general awareness on the new obligations to be introduced under the making tax digital regime, from April 2024, where landlords with rental income of over £10,000 a year will be required to provide quarterly updates.
On the basis of this, the OTS may make recommendations for simplification and ways of addressing distortions.
The survey is open until 11.45am on 5 June 2022. Anyone who would like to participate in it can do so here.