HMRC One to Many Letters on Landlords’ Tax Relief Claims

Written by: Liez Comendador
Written by: Liez Comendador
One to Many Letters

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HMRC sends one to many letters to different taxpayer groups or agents for various purposes, with content ranging from pure information to prompts. UK landlords are HMRC’s latest targets. This article simplifies all that landlords need to know about the HMRC one to many letters they have received and what they need to do next.

Landlords’ Quick Guide to the Latest HMRC Letter

The latest one to many letters HMRC has been distributing since December 2023 is directed to landlords who might have tax relief claim issues on their 2021/22 self assessment records, calling that they make amendments on their tax returns and payments by the end of January 2024.
Landlord recipients of the recent HMRC

The UK tax authority noticed a prevalence of error amongst landlords claiming tax relief on their rental repair and maintenance costs, where overclaim and misclaim overlap. HMRC’s letter one to many (OTM) highlights a potential cause of overclaim—that landlords may also have included capital costs in the calculation.

The letter “PIRM Letter Tranche 2” aims to clarify which rental expenses are allowed to be claimed tax reliefs for and which ones are not, ultimately prodding recipients to fix any misreports and payment errors. See below for a quick difference.

Which Rental Costs Are Allowable and Not?

Allowable rental maintenance and repair costs may include but are not limited to the following: 

  • Painting and decorating outdoors and indoors 
  • Treating damp and rotting parts of the house 
  • Repairing damaged windows, doors, furniture, and appliances like cookers or lifts  
  • Replacing roofing slates, flashing, and gutters 
  • Cleaning of stone surfaces 
  • Re-pointing  

On the other hand, landlords cannot claim capital expenses, which are described as costs associated with property projects that will be used for a long time. Some examples include: 

  • Adding something to the property that did not exist before (e.g., loft conversion, extension, conservatory, etc.) 
  • Altering, improving, or upgrading anything existing in the property 

Rental expenditure does not include any equipment purchases and furnishings for the property. 

Take the Next Steps with Legend Financial

It can be very tricky to determine which allowable rental costs to include in your self assessment tax return and which ones you should not. If you are one of the many landlord recipients of HMRC one to many letters, you will also have to make payment adjustments on your 2021/22 tax year liability before January 2024 ends, if any. 

Given the fewer days to accomplish this task, let the experts do the job. Legend Financial is here to help you all throughout, from evaluating your previous tax return to working out your tax bill, accurately, quickly, and efficiently! Spare yourself from this stress. Talk to one of our tax experts today!

References

HMRC One to Many Letters sent to landlords concerning rental costs. 5 January 2024. Retrieved from Chartered Institute of Taxation:
https://www.tax.org.uk/hmrc-one-to-many-letters-sent-to-landlords-concerning-rental-costs 

CH600120 – The One to Many Approach: introduction: what is one to many? 5 January 2024. Retrieved from Gov.UK:
https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch600120 

Author

  • Junaid Usman

    Apart from being a partner at Legend Financial, Junaid is an expert on Business Tax including business management advisory services which has proven in the growth of company. He is a promising advisor with an ideology; "Any business success depends on the level of objectivity it maintains."

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Junaid Usman
Junaid Usman
Apart from being a partner at Legend Financial, Junaid is an expert on Business Tax including business management advisory services which has proven in the growth of company. He is a promising advisor with an ideology; "Any business success depends on the level of objectivity it maintains."

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