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A Complete Guide to Let Property Campaign

Published by Prasun Shrestha
Published Date: December 18, 2022

The Let Property Campaign (LPC), introduced in 2013, is a disclosure initiative of HMRC aimed at encouraging landlords who own and rent out residential properties to come forward and disclose any rental income they may have previously undeclared to the tax authorities. 

This guide is intended for individuals who have received a "nudge" letter from HMRC requesting disclosure of their property income, or those who are voluntarily choosing to report their property income to HMRC. It provides comprehensive coverage of all aspects of the Let Property Campaign, including eligibility, the disclosure process, and potential penalties. 

Undisclosed Rental Income : A Sample Letter from HMRC

If you are a landlord of residential property and have not yet disclosed your income from letting property to HMRC, you may receive a letter similar to the one shown below.

If you've received a similar nudge letter from HMRC and are unsure what to do, Check our article on HMRC Investigations and Nudge Letters: Understanding and Managing Tax Enquiries or contact us.

Eligibility for Let Property Campaign

The Let Property Campaign has a wider range of coverage for landlords who can take advantage of its benefits. Nonetheless, there are some exceptions to keep in mind.

 Any landlord who has undeclared income related to residential property can apply for the Let Property Campaign. This includes landlords:

Renting out a room in your main home for more than rent a room scheme threshold (Β£7,500)

Renting out single or multiple properties

 Living abroad and renting out the property in the UK

Living in the UK and renting out the property abroad

Renting out of holiday home even if it is for personal use

Exceptions

Let Property Campaign cannot be applied by:

  • landlords renting out non-residential properties like shops, garages, lockups etc.
  • landlords who are representing a trust or company and want to report their income.

Applying for Let Property Campaign

If you are a landlord who owns and rents out residential property and you wish to participate in the Let Property Campaign, you can follow these steps to apply:

Notify

To start the process of disclosing your previously undeclared rental income through the Let Property Campaign, the first step is to inform HMRC of your intentions.

This can be done by completing the Digital Disclosure Service (DDS) form. However, if you are making the disclosure on behalf of someone who has passed away, it is important to clearly indicate that you are doing so on their behalf.

At this stage, you are not required to provide any details about the undisclosed income or the amount of tax you owe. After receiving your notification, HMRC will issue you a unique Disclosure Reference Number (DRN), which you will need to use when communicating with them about the Let Property Campaign.

Let Property Campaign Application Information

To notify HMRC under the Let Property Campaign, you will need to provide the following information.

  • Individual Information

  • Property Information

  • Name, Address and Date of Birth
  • Email Address
  • Telephone Number
  • Unique Taxpayer Reference Number
  • National Insurance Number
  • Primary Occupation
  • VAT Registration Number

Sample Letter from HMRC Upon Notification for LPC

After you have notified HMRC of your intent to participate in the Let Property Campaign, you will be sent a letter that resembles the example below.

Note: You can make the disclosure of your rental income as soon as you receive your unique Disclosure Reference Number (DRN).

However, it must be done within 90 days of receiving the notification acknowledgement.

Making Let Property Campaign Disclosure

The process of preparing a disclosure involves several steps and requires you to gather various pieces of information related to your rental income and expenses.

The steps involved in preparing a disclosure under the Let Property Campaign are explained as follows:

Calculate the Tax Owed

To calculate the tax you owe, you must first determine the total rental income that you failed to report to HMRC in previous years.

While doing so, you must ensure to exclude any income that you've already disclosed to HMRC on previous tax returns, as you should have already paid taxes on that income.

In order to arrive at your taxable profit and the amount of tax due on your rental income, you must first subtract any allowable expenses that were incurred while generating that income.

The rates of Income tax you’ll pay depend on how much income you earn above your Personal Allowance, which is an annual amount of tax-free income

Rental Income Tax Calculator

Presenting our revolutionary in-house rental income tax calculator. Get ahead of the game by finding out potential savings you can make on your income today!

Make a Formal Disclosure

Once you have calculated the tax owed, you'll need to make a formal offer to HMRC.

This involves completing the disclosure form and providing details of the rental income that you haven't declared. This offer, once accepted by HMRC, creates a legally binding contract between you and HMRC

Sample Acceptance Letter from HMRC for LPC

Here is a sample of an acceptance letter from HMRC for a disclosure submitted on behalf of one of our clients:

Payment

You must make a payment to HMRC no later than the 90 days specified on your notification acknowledgement letter unless you’ve contacted HMRC to request an extension on the payment deadline.

You must use your Payment Reference Number (PRN) provided by HMRC to pay the sum that has been offered when submitting your disclosure.

In cases where you can't pay the full amount, you need to inform HMRC as soon as possible before sending in your disclosure by contacting the β€˜Let Property Campaign Helpline’.

Let Property Campaign Penalties 

When determining penalties, HMRC considers the behaviour that led to the understatement, whether you voluntarily came forward, and the quality of your disclosure.

The penalties are calculated as a percentage of the potential lost revenue which is additional tax amount payable by the landlord after taking into consideration of undisclosed property income.

The penalty can be reduced based on the quality of disclosure under the Let Property Campaign. The penalty reduction is applied on the difference between the maximum & minimum penalty rate of the range it falls.

 The penalty reduction is based on how you respond to the questions from HMRC (telling), helping with their assessment (helping) and giving access to records and documents wherever required (giving access to records).

30%
Telling
40%
Helping
30%
Giving Access to Records

Non Disclosure Penalties for the Let Property Campaign can take two forms.

Penalties for Faliure to Notify

If an individual fails to notify HMRC of their tax liability within the appropriate deadline, they may face a penalty for failure to notify. This could happen to someone who only had employment income subject to PAYE tax and didn't previously file a self-assessment tax return. In this case, penalties for failure to notify is levied.

Type of Behaviour

Unprompted Disclosure

Prompted

Disclosure

Non-deliberate-within 12 months of tax being due

0% to 30%

10% to 30%

Non-deliberate-12 months or more after tax was due

10% to 30%

20% to 30%

Deliberate

20% to 70%

35% to 70%

Deliberate and concealed

30% to 100%

50% to 100%

Let Property Campaign Penalty (LPC) Calculator

Try out our exclusive Penalty calculator. Stay ahead of the competition and know the applicable penalty amount in your Let property campaign.

For Example, 

Upon investigation, HMRC found that John owns a property in the UK but did not disclose his income related to it. He was aware of the requirement to disclose his income but had no intention to conceal it.

This case was classified as Prompted and Deliberate Failure to Notify. The penalty range is therefore 35% to 70%. Moreover, he received a reduction in the quality of disclosure (i.e., telling and helping) of 70%.

LPC Calculation

The total penalty to be paid by Mr. John is Β£9,039.

For Example, 

Upon investigation, HMRC found that John owns a property in the UK but did not disclose his income related to it. He was aware of the requirement to disclose his income but had no intention to conceal it.

This case was classified as Prompted and Deliberate Failure to Notify. The penalty range is therefore 35% to 70%. Moreover, he received a reduction in the quality of disclosure (i.e., telling and helping) of 70%.

LPC Calculation

The total penalty to be paid by Mr. John is Β£9,039.

Penalties for Inaccurate Returns

If an individual has already filed their tax return but failed to report their property income, they may face a penalty for inaccurate returns. The penalty rate for filing incomplete or incorrect self-assessment returns is different from the penalty rate for not filing them at all

Type of Behaviour

Unprompted Disclosure

Prompted

 Disclosure

Reasonable care

No penalty

No penalty

Careless

0% to 30%

15% to 30%

Deliberate

20% to 70%

35% to 70%

Deliberate and concealed

30% to 100%

50% to 100%

For Example, 

Hailey realised after submitting her self-assessment tax return that she had failed to disclose her property income from a property she owns to HM Revenue & Customs (HMRC). She chose to voluntarily report her income to HMRC.

This case was classified as Unprompted and Careless Inaccuracy. The penalty range is therefore 0% to 30%. Moreover, she received a reduction in the quality of disclosure (i.e., telling and helping) of 70%.

LPC Calculation
The total penalty to be paid by Hailey is Β£5,388. 

Case Video

Our team takes pride in the successful resolution of diverse tax cases, providing clients with top-notch advice and solutions. 

Watch the video below to learn about how we've resolved Let Property Campaign case for one of our client.

How can UKPA Help ?

Are you a landlord who needs to disclose rental income through the Let Property Campaign?

With our successful track record in managing multiple Let Property Campaign cases, you can trust us to provide a smooth resolution to your tax affairs, while reducing penalties and interest charges.

Prasun Shrestha
Our Complete Guides
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