I know several colleagues who have invested in property this way. Is this something that should unduly concern them?
A. With the Office for National Statistics revealing that one in seven people in their fifties or sixties have a second home; this is a tempting target for the tax man.
Apparently a 200-strong team of investigators are to tackle tax evasion on holiday homes and in particular they are targeting the wealthy that earn more than £150,000 a year.
The internet makes it easier for investigators to check on people, and tax exchange agreements with other countries mean it is far easier for the taxman to access information.
So it’s clear that this is now going to be looked at more closely with British tax returns checked to identify “those who do not appear to be declaring the correct income and gains from the property” say HMRC.
This will include owners who rent out their property to friends for relatively small sums.
Therefore any owner of a holiday home who rents it out should have nothing to worry about – as long as they ensure all rental income is declared properly!