Taxman targets Buy to Lets

According to the Times ,Landlords who fail to declare their income or claim too much tax relief could face a nasty bill from the taxman. HM Revenue & Customs has identified 80,000 landlords whose paperwork is not in order and could owe the Government money.

The issue of correctly taxing landlords was raised at a meeting of accountants, tax experts and HM Revenue & Customs last week.The campaign will target "ghost" landlords who have failed to declare themselves as property owners.It will use information from banks, tenants and letting adverts to find those evading their tax responsibilities, the paper says.

The discussions came as the UK's buy-to-let market continues to explode in size with one million more homeowners looking to rent out a second property by 2010.Research by market analyst Mintel released last month said there are currently around two million people in the UK who own a second home.

Buy-to-let landlords must pay tax on the rent they receive from the property or a capital gain made on its sale.But they can also claim tax relief on the cost of managing the property, and in some cases on the mortgage interest they are charged.