RESIDENTS hoping to cash in on Royal Ascot 2005 by renting out York homes have been warned not to forget the taxman.

City firm Countrywide Residential Lettings issued the alert as the race to rent properties for the racing showpiece gathered momentum.

York branch manager David Hopwood said most prospective Ascot letters had probably not considered that the extra thousands gained from the festival could propel them into a higher tax bracket.

He said: "A lot of people probably haven't even thought about the tax implications.

"money from letting is classed as unearned income and, in some cases, people could be taxed at 40 per cent.

"Naturally there will be some people who do not inform the tax office. People need to be aware that in law they have to declare - that's what we are telling our landlords as part of our duty of care."

Mr Hopwood said letters would be able to avoid being taxed on agent fees, insurance and cash spent on household additions like extra double beds, bought to cater for an influx of race-goers.

However, he said profit made from rent would be taken into account by Inland Revenue officials.

But he added that the quality of Ascot properties flooding on to Countrywide's books suggested that many of his clients were already on the 40 per cent tax band.

He is due to visit a five-acre manor house this week. Other luxury homes on his 200-strong list include a 15-bedroom property with electric gates within the city walls, and a ten-bedroom home, with pool, tennis court and helipad, on the outskirts of York.

Mr Hopwood warned would-be landlords bypassing letting firms not to reveal too much information about their properties to the public. Such information was priceless for opportunist burglars, he added.

"Too much information displayed about your property could lead to burglaries. Anyone has access to your property and knows it will be empty for the duration of the week."

Mr Hopwood also called on Ascot letters to check insurance policies and emergency repair plans before letting strangers in their homes.

Countrywide offers £100,000 contents insurance, takes a minimum deposit of £5,000 for each let and checks tenants, he said.

He said: "If handled correctly, this is a great way to make money. However, landlords need to be aware of the pitfalls."

Updated: 08:28 Friday, April 30, 2004