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HMRC Let Property Campaign: Understand Landlords Tax On Rental Income

HMRC Let Property Campaign: Understand Landlords Tax On Rental Income

HMRC Let Property Campaign: Understand Landlords Tax On Rental Income

The Let Property Campaign (LPC) was first introduced in 2013 and is still running today in 2023.

We’ve seen HMRC continue to target residential property landlords and other buy-to-let investors by sending letters about the Let Property Campaign and asking them to declare undisclosed rental income.

In this blog we look at the details of the Let Property Campaign, including how to disclose property rental income and the benefits of taking part and penalties if you fail to notify HMRC of this income.

If you want to be a part of Let Campaign or want to disclose your rental income, Please call us on 03300 575 902

What is the Let Property Campaign?

The campaign is run by HMRC and is targeted at anyone that earns rental income from residential property lettings. This could be residential property landlords, buy-to-let investors or individuals renting either a single or multiple properties.

It is a way for landlords to make a voluntary disclosure of previously undisclosed property investment income to HMRC and pay the tax due on that income with the offer of reduced penalties and improved terms for doing so.

What type of people and property is covered by the Let Property Campaign?

The Let Property Campaign covers all residential property including:

  • People with multiple properties.
  • People with single rental properties.
  • Specialist landlords such as those with student or workforce rentals.
    People with holiday lettings.
  • People who rent out a room in their main home for more than the Rent a Room Scheme threshold.
  • People who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK and are still liable to UK taxes.
  • People living in the UK and renting property abroad.

You may not be eligible for the Let Property Campaign if you want to disclose income on behalf of a trust or a company. You should also seek guidance if you jointly own a property with your spouse or civil partner.

You can use the Let Property questionnaire to check if you need to disclose unpaid taxes under this campaign.

Is non-residential property covered by the Let Property Campaign?

The campaign is not open to individuals and landlords that let out non-residential properties this includes the types below:

  • Shop
  • Garage
  • Lock up

How can HMRC find out about my rental income?

HMRC’s sophisticated Connect system can analyse data from numerous sources. HMRC have a variety of sources to check if individuals receive rental incomes from property. They can check the land registry and identify individuals who have paid stamp duty land tax. The electoral register also allows them to see who is living at an address and use that data to track potential rental income.

If you want to be a part of Let Campaign or want to disclose your rental income, Please call us on 03300 575 902

Steps to declare undisclosed income via the Let Property Campaign

To make a Let Property Campaign disclosure, you need to:

  • Notify HMRC that you want to take part in the Let Property Campaign.
  • Declare to HMRC all your undeclared income, gains, tax and duties that you may not have previously declared on past years self-assessment tax return (do not include previously declared rental income). This is the most important part of the disclosure process. If you are unsure how to work this out, seek advice from a qualified accountant or tax professional to help to ensure your provide the correct information to HMRC, otherwise you may incur higher penalties.
  • Make a formal offer. You should make an offer to pay the full amount of the total you owe. When HMRC accept your offer to pay the full amount, it creates a legally binding contract between you.
  • Pay HMRC the additional tax that you owe for previously undisclosed taxes within the appropriate deadline (see below the deadline and if you can’t pay).
  • Help HMRC as much as you can if they ask you for more information.

How many years should I include in my disclosure via the Let Property Campaign?

You should declare any years in the last 20 years that you have received undeclared property income. Bear in mind that the law allows HMRC to go back up to 20 years and in the most serious cases HMRC may carry out a criminal investigation.

How do I work out what I owe under the Let Property Campaign

Calculating what you owe can be immensely complex, so we advise that you seek advice from a professional tax advisor. Not only do you need to calculate the total property income you’ve received, but you need to know what allowable expenses you can deduct against that income (this will reduce the tax you owe).

You then need to work out the tax you owe to HMRC, which again can be complex as tax rates change over the years and you’ll need to consider personal allowance and relevant income tax rates.

Even if you’ve made rental losses once you’ve deducted allowable expenses from your rental income, you need to declare these losses as well. Rental losses from previous tax years can often be carried forward to reduce your tax liability in future years.

What happens if I don’t have accurate records?

If you don’t have complete records, you will need to estimate your figures for the disclosure. Bank statements are often a good way to show what you’ve earnt or spent, even if you don’t have receipts or invoices. HMRC may ask for an explanation of your estimates, so be prepared.
Future failure to keep appropriate records, can result in penalties up to £3,000, so ensure your keep accurate records from the date of your disclosure form if you are still receiving property letting income.

What is the end date for the Let Property Campaign?

Unlike some other HMRC campaigns, there is no disclosure ‘window’ or ‘cut off’ date currently that requires you to disclose what you owe by a specific date. However, we would advise that you do this as soon as possible in case these rules change and the window is closed by HMRC.
If you delay in notifying HMRC, then you will risk higher penalties, or you may be subject to a full tax enquiry (which is likely to cost you much more to defend and also result in higher penalties). Those that don’t make a disclosure and are traced by HMRC to have received undeclared income could also face criminal prosecution.

If the issue is because of errors, misunderstanding or just to deliberately avoid paying the tax you owe, then it is always better to approach HMRC via a campaign like this, than to wait for HMRC to find you and chase you.

If the errors were due to misunderstanding the rules or deliberately avoiding paying the right amount it is better to come to HMRC and admit any inaccuracies rather than wait until HMRC uncovers those errors.

If you want to be a part of Let Campaign or want to disclose your rental income, Please call us on 03300 575 902

How long do I have to work out and pay the tax that I owe?

Once you have notified HMRC under the Let Property Campaign, you want to take part and made a formal offer, you will have 90 days to calculate and pay what you owe.

If you cannot afford to pay within this time period and in one lump sum, depending on your circumstances, you may be able to spread your payments. This has to be arranged with HMRC.

What are the benefits of making a declaration under the Let Property Campaign?

The Let Property Campaign will allow you to take advantage of the best possible terms offered by HMRC to get your tax affairs in order.
When you make your disclosure, you can notify HMRC how much penalty you believe you should pay. Declaring under the campaign is likely to offer you more favourable reduced penalties, than if HMRC contact you first. This is because HMRC will consider the level to which you have helped them and the information you have provided when deciding on the penalties you pay.

Some people don’t have to pay any penalty at all but if you do, it is likely to be lower via the Let Property Campaign declaration than if HMRC chase you.

What if HMRC disagrees with the disclosed information?

HMRC reviews all disclosures carefully. If they decide to accept your disclosure, they will send you a letter accepting your offer.
If HMRC don’t accept your disclosure, they will contact you. If they find that your disclosure is materially incorrect, they will look to charge significantly higher penalties to you, so getting your disclosure right is important.

Non-disclosure penalties on Let Property Campaign

The Let Property Campaign non-disclosure penalties can be for both failure to notify penalties and inaccurate return penalties for and inaccurate tax return.

If you fail to notify HMRC of the tax you owe within the agreed deadlines then penalties for failure to notify will be charged.

If you’ve filed a self-assessment tax return but you didn’t report property income on the tax return, then a penalty for inaccurate returns will be charged. If you didn’t file a self-assessment tax return at all, then a different penalty will apply.

The calculation for penalties can be complex, so seek advice from a qualified tax professional.

If you want to be a part of Let Campaign or want to disclose your rental income, Please call us on 03300 575 902

Are you seeking to declare your rental income through the Let Property Campaign?

If you have received property income and rental profits that you have failed to disclose to HMRC, then getting up to date with HMRC for your tax affairs and any unpaid liabilities is crucial to minimise penalties or avoid prosecution.

Making an unprompted disclosure will often result in a more favourable outcome than if you wait for HMRC to find you and approach you about unpaid tax. So, to get the best outcome it is better to make a disclosure through the Let Property Campaign.

However, working out your income, deducting allowable expenses and working out the tax you owe will be complex, so seek professional advice.

We can help you to make a disclosure via the Let Property Campaign, call our property experts today on 03300 575 902 or contact us via email on