HM Revenue & Customs (HMRC) clawed back a record £107 million from landlords in the last tax year, underscoring the growing pressure on property investors to keep tax affairs watertight. The haul, revealed via a Freedom of Information request, came through the Let Property Campaign, a disclosure scheme targeting undeclared rental income.
Bigger tax haul, fewer disclosures
According to data obtained by Price Bailey accountants, revenue from the campaign jumped from £65 million in 2022–23 to £107 million in 2024–25, even as voluntary disclosures dropped from around 11,000 to 7,800 cases.
Andrew Park, tax partner at Price Bailey, said his firm has helped “large numbers of landlords make voluntary disclosures—typically after they’ve received an HMRC ‘nudge’ letter.” The figures suggest those coming forward now owe larger sums, highlighting the risk of ignoring HMRC prompts.
Complex rules trip up landlords
The scheme allows HMRC to reclaim up to 20 years of unpaid tax and impose fines of up to 100%—or 200% for offshore holdings. Errors deemed “careless” can still draw penalties of up to 30% of the tax due.
Mortgage broker Howard Levy of SPF Private Clients noted that “amateur or accidental landlords are perhaps the most likely to make mistakes,” citing those who inherit properties or let homes informally. Park added there is “widespread confusion” over what counts as capital versus revenue expenditure—for example, a new high-end kitchen is not deductible against rental income, but a like-for-like repair is.
Tighter margins after tax changes
Recent policy shifts have made compliance trickier. Mortgage interest relief for landlords was phased out by 2020, replaced with a 20% tax credit—effectively halving relief for higher-rate taxpayers. The basic £1,000 property income allowance remains, but landlords earning more must register with HMRC and, if profits exceed £2,500 after expenses, complete self-assessment returns.
An HMRC spokesperson said the Let Property Campaign “offers landlords a straightforward way to disclose any unpaid tax and secure the best possible terms,” but warned that failing to act before an investigation begins can lead to far harsher penalties.
Editor’s view
For professional and part-time landlords alike, the message is clear: HMRC’s data-matching powers—from letting platforms to mortgage records—are tightening the net. With penalties stretching back two decades, proactive disclosure and meticulous record-keeping are now essential parts of a landlord’s business plan.
