HMRC has warned landlords to disclose their earnings on self assessment tax returns.

The tax authority has clarified the guidance on who can participate in the Let Property Campaign, which is targeted at landlords who owe tax through letting out residential property in the UK or abroad.

Landlords can report previously undisclosed taxes on rental income to HMRC under the Let Property Campaign if they are an individual landlord renting out residential property.

The campaign covers landlords who rent out single or multiple properties, rent out a room in their main home that exceeds the Rent a Room Scheme threshold and holiday lettings.

It is also important to note that, for those living abroad or intending to live abroad for more than six months and renting out a property in the UK, those earnings may still be liable to UK taxes.

Tax must be paid on any profit made from renting out property. The profit is calculated based on the amount left once claims for expenses or allowances have been deducted.

HMRC warned:

‘If you’re a landlord and have undisclosed income, you must tell HMRC about any unpaid tax now. You’ll then have 90 days to work out and pay what you owe. If you do not do this now, and HMRC finds out later, you could get higher penalties or face criminal prosecution.’

Internet link: GOV.UK

The extra costs of the increase in employers’ NICs could cause businesses to respond in ways the government did not intend, the Chartered Institute of Taxation (CIOT) has warned.

At the Autumn Budget, Chancellor Rachel Reeves announced an increase to the rate of employer NICs by 1.2 percentage points, to 15% from 6 April 2025.

The CIOT says that the increase extends the differential in the burden of tax and NICs borne by those in employment compared to those engaged as self-employed.

The higher employers’ NICs goes, the greater the likelihood employers may seek ways to mitigate or absorb the burden, which could include potential alternative arrangements to taking on people as employees, adds the CIOT. Alternatives could include outsourcing or offshoring services and reducing the numbers of employees.

Eleanor Meredith, Chair of CIOT’s Employment Taxes Committee, said:

‘While employers must pay employer NICs on their employees’ earnings, no employer NICs is due where someone is genuinely self-employed.

‘We are concerned that the increase in employers’ NICs could lead to an increase in ‘false self-employment’, where businesses trying to save money turn to arrangements where the worker is not directly employed by them, without necessarily appreciating the rules and risks of such arrangements.

‘A worker’s employment status for tax is notoriously difficult to judge, as we have seen from recent complex litigation involving some TV presenters. HMRC will need to be sufficiently resourced to tackle potential increases in ‘false self-employment’.’

Internet link: CIOT

Business groups have reacted to Chancellor Rachel Reeves’ Autumn Budget speech.

The Confederation of British Industry (CBI) said that the Chancellor ‘had difficult choices to make to deliver stability for the economy’.

Rain Newton-Smith, Chief Executive of the CBI, commented:

‘A more balanced approach to our fiscal rules which prioritises capital investment should help to unlock private sector investment in our infrastructure and net zero transition over the long-term.

‘While the Corporation Tax Roadmap will help create much needed stability, the hike in National Insurance contributions (NICs) alongside other increases to the employer cost base will increase the burden on business and hit the ability to invest and ultimately make it more expensive to hire people or give pay rises.’

Meanwhile, Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), labelled the fiscal event a ‘tough Budget for business‘. She continued:

‘While some protection for smaller firms is welcome, the increase in employer NICs will place a further cost burden on business. This, coupled with a 6.7% increase in the National Living Wage (NLW) means many firms will find it more challenging to invest and recruit in the short-term.

‘But the Chancellor has looked to offset the upfront hit on firms by outlining a longer-term framework to provide stability for the economy.’

The Institute of Directors (IoD) branded the Autumn Budget as offering ‘short-term pain for the business community’.

Roger Barker, Director of Policy at the IoD, said:

‘The government has chosen to impose a significant new tax burden on business as a means of achieving an immediate boost to its public sector spending priorities. The risk is that this will exert a negative impact on business confidence, with worrying implications for the economy’s future growth trajectory.’

Internet links: CBI BCC IoD

The government’s Make Work Pay Bill lacks a pro-growth element and will increase economic inactivity, the Federation of Small Businesses (FSB) has warned.

The business group says that the legislation, particularly around day one dismissal rights, risks deterring small employers from taking a chance on someone who has had a significant period out of the workplace, shutting those doors and deepening social exclusion

It warns that the Bill is rushed and poorly planned while dropping 28 new measures onto small business employers all at once leaves them scrambling to make sense of it all.

There are already 65,000 fewer payroll jobs since Labour took power, and the new government is sending out a ‘troubling signal to businesses and investors’, the FSB adds.

Tina McKenzie, Policy Chair at the FSB, said:

‘The Chancellor has the opportunity to lead the way in adding a pro-business, pro-employment element to Make Work Pay in her upcoming Budget. This should include a rise in the Employment Allowance, pegging it to future rises in the National Living Wage. It should also include the reintroduction of the small business rebate for Statutory Sick Pay.

‘Sufficient time should be taken to avoid this becoming a hastily cobbled-together Act of Parliament. We look forward to more engagement and the start of a full consultation on each individual measure to ensure the voice of small employers is heard.’

Internet links: FSB

The new Growth and Skills Levy must end the ‘cycle of policy failure’ in addressing Britain’s chronic skills shortages, according to the Resolution Foundation.

The think tank says the government must get its design and implementation right if it’s to boost the number of apprenticeships after years of decline and ensure that Levy funds go to young people who need it most.

The Foundation says that Britain’s chronic skills shortages are underlined by the fact that the share of job vacancies caused by firms finding it hard to recruit people with the right skills or qualifications has more than doubled over the past decade from 16% in 2011 to 36% in 2022.

Skills shortages aren’t just preventing firms from recruiting either: an increasing share of workers are judged by their current employers to not have the right level of skills required to do their job.

Louise Murphy, Senior Economist at the Resolution Foundation, said:

‘For too long, well-intentioned reforms have failed to end the cycle of failure when it comes to addressing chronic staff shortages across Britain.

‘One-in-three vacancies today stem from firms not being able to find people with the right skills, while too many young people struggle to find a route into skilled work that doesn’t involve university.

‘The new Growth and Skills Levy offers a fresh chance to break this cycle. But the government must get the detail right if it’s to avoid repeating the same policy mistakes.’

Internet links: Resolution Foundation