HMRC Recovers Record £107m from Landlords in Property Income Crackdown

HMRC is stepping up efforts to recover unpaid tax from landlords after voluntary disclosures through its Let Property Campaign dropped to their lowest level in years.

The scheme, which allows landlords to come forward and pay taxes on previously undeclared rental income for reduced penalties, generated £107 million in the 2023/24 tax year — the highest amount since its launch. Yet only 7,800 landlords disclosed unpaid tax, compared with around 11,000 the year before. The fall in voluntary participation signals that HMRC may need to lean more heavily on enforcement to close the gap.

Who Can Utilise the Let Property Campaign?

The Let Property Campaign gives individual landlords a chance to declare previously undisclosed rental income. It applies to a wide range of situations, including those renting out:

• A single property or multiple residential properties
• A room in their main home above the Rent a Room Scheme threshold
• UK property while living overseas for more than six months
• Holiday lets in the UK or abroad
• Inherited homes that are subsequently rented out

The scheme does not extend to non-residential property such as shops or garages, nor does it cover income received through companies or trusts.

Why Landlords Get Caught Out

Experts say smaller or accidental landlords, such as those who inherit a property or let it out occasionally, are particularly prone to mistakes. Without the checks and oversight of a mortgage lender or professional tax advice, some fail to keep accurate records or misjudge what expenses can be claimed.

One of the most common pitfalls is the distinction between capital expenditure and allowable expenses. For example, repairing or replacing an existing kitchen can usually be deducted, but upgrading to a significantly higher specification counts as capital and cannot be offset against rental income.

HMRC’s Growing Property Income Crackdown

To encourage compliance, HMRC continues to send “nudge letters” to landlords it believes may have undeclared rental income, based on data from letting platforms, councils and other sources. Officials say landlords who make use of the campaign will benefit from simpler processes and more favourable settlement terms than if HMRC identifies the irregularities first.

Experts describe the campaign as “a simple, straightforward way for landlords to disclose any unpaid tax and take advantage of the best possible terms.”

Conclusion

The record amount collected highlights HMRC’s increasing reliance on technology and data-matching to identify undeclared income. With fewer landlords coming forward voluntarily, the risk of tougher penalties and investigations is rising.