£50k tax bill for landlords

Up to 80,000 buy-to-let mortgage holders could face average bills of £48,600 each from the government as it tries to recover tax from landlords who have not paid enough, claims the Times newspaper.

Banks, tenants and letting agents are to provide information to HM Revenue and Customs in an attempt to clamp down on "ghost landlords" who have declared their financial position incorrectly.

The new push will target buy-to-let mortgage holders who have claimed too much tax relief, neglected to declare rental incomes or capital gains made on the property.

Landlords can offset some tax from their rental incomes provided they are repaying interest only. Property owners who have offset tax on repayments that have gone towards the capital borrowed will be asked to repay the taxes.

Landlords found to have breached the rules will be required to pay up to six years in unpaid taxes, which in some cases could force them to sell their properties.

Buy-to-let mortgages have proven very popular, with an estimated 400,000 buy-to-let landlords already using the mortgages. And according to market analyst Mintel, one million homeowners are looking to rent out a second property, with many opting to use a buy-to-let mortgage to do so.