The Office for Tax Simplification (OTS) had signalled that it would carry out a review into possible simplification of the tax and administrative treatment of individuals, partnerships or micro companies deriving income from residential property. It has now published the call for evidence alongside an online survey that will allow the OTS to hear views directly during the consultation period.

The questions are grouped into four areas:

1. Structural aspects: These questions seek views on issues arising from differences in the tax treatment of property income, income from other investments and trading income. The OTS also asks what prompts landlords to incorporate their property rental businesses. The furnished holiday lettings (FHL) rules are also in the spotlight with the OTS asking about the benefits and drawbacks of having a different regime for taxing property income and capital gains from FHLs.
2. Operational aspects: These questions focus on the choice between using the cash basis and accruals basis accounting for income from property. The OTS also asks about the operation of reliefs and exemptions available to those with property income and HMRC’s processes and guidance around property income, including initial registration.
3. Administrative and compliance aspects: This section seeks views on the role of third parties such as letting agents or online platforms. It also asks for experiences of completing a tax return to report property income and about awareness of and preparations for making tax digital for income tax self assessment from April 2024.
4. Non-UK aspects: This section includes questions relating to the non-resident landlords scheme and issues particular to UK residents receiving rental income from overseas.

The deadline for responses is 5 June 2022. ICAEW’s Tax Faculty would welcome comments from members by 3 May 2022, to caroline.miskin@icaew.com. Please contact Caroline as soon as possible if you would like to be involved in discussions with the OTS.