Landlords, Taxation

Let Property Campaign: A comprehensive guide for UK landlords

10 min read

If you’re a UK landlord, you need to pay rental income tax on all annual gross property income over £1,000 (your property allowance). In case you haven’t been paying the tax you owe, whether because of a lack of knowledge about your liability or other factors, you have the opportunity to rectify it through the Let Property Campaign. 
 
HMRC launched this campaign to help UK residential landlords get the best terms on the tax they owe through voluntary self-disclosure. Read on to learn more about the HMRC Let Property Campaign for UK property landlords. 

What is the Let Property Campaign?

The Let Property Campaign is an initiative by HMRC to encourage UK residential landlords to bring their tax affairs up to date by disclosing any previously undeclared rental income. The goal is to offer landlords a chance to rectify any errors and avoid stricter penalties in case HMRC discovers the errors later. 
 
Disclosure under the Let Property Campaign is voluntary, and those who wish to participate must inform HMRC, after which they have 90 days to calculate the amount they owe and pay up. If HMRC examines the landlord’s accounts and finds an issue, the disclosure becomes mandatory.

Scope of the Let Property Campaign

The Let Property Campaign applies to any rental income from residential properties (UK or abroad) that hasn’t been declared already. It includes income from lodgers, Airbnb rentals, and other forms of letting and applies to any number of properties that you might be letting. It does not apply to landlords letting out non-residential properties like garages or shops or if you are a company or trust which is renting out rental properties.

Steps to take part in the Let Property Campaign

To register for the Let Property Campaign, these are the steps you need to follow.

  • First, you need to notify the HMRC either over the phone or online that you wish to take part.
  • HMRC will issue you a unique reference number. From that day, you have 90 days to submit your disclosure and pay the amount you owe.
  • You’ll need to gather all the information that needs to be disclosed, including information on all income and expenses. This covers undeclared rental income as well as other forms of income, like P60s and P11Ds from your place of employment.
  • You’ll need to declare any technical matters that affect your disclosure.
  • You’ll need to calculate the tax amount owed. HMRC offers this online calculator to help out. To disclose more than seven years of unpaid tax, there is a separate calculator here. HMRC requires that payment be made on the same day as the disclosure — if you need extra time to pay, you’ll have to call the helpline before the 90 days expire. HMRC will help you come up with a plan to spread out your payments.
  • If all goes well, HMRC will accept your declaration, and you won’t have to pay anything else. In some cases, HMRC may reach out for further information. If HMRC rejects the disclosure, it means that they disagree with your self-assessment of the rental income you owe. Your Let Property Campaign accountant will help you out with the next steps.

What are the penalties for undisclosed income?

Let Property Campaign penalties can be hefty. The actual amount depends on the duration and severity of the non-declaration and could include interest on unpaid taxes, sizable fines, and even prosecution in the more severe cases. 
 
Overall, the Let Property Campaign fines tend to be lower than the fines you would incur if HMRC discovers the issue on its own. We thus recommend signing up for a voluntary disclosure as soon as possible.

What to do if you have received a nudge letter from HMRC?

A “nudge letter” is a sort of gentle reminder from HMRC about potentially undeclared rental income. Typically, it’s a form of one-to-many communication targeting multiple businesses and individuals within a specific sector. The goal is to remind the recipients of their tax responsibilities rather than indicate any specific transgression on their part.
 
If you have received a nudge letter, don’t panic! It doesn’t necessarily mean that you owe undeclared money or that you’ve been subject to Let Property Campaign fines. If you suspect that they have discovered a potential issue in your tax returns, contact HMRC directly for more details. It’s also a good idea to use this opportunity to sign up for a Let Property Campaign disclosure. Ask your accountant about what steps to take to ensure that your disclosure is as flawless as possible.

Where does HMRC get its information?

HMRC can gather information about your tax records as a UK landlord from various sources like banks, letting agents, tenant records, foreign records, and so on. From 1 January 2024, Airbnb has been required to share their data with HMRC. 
 
They will then compare that information with the records already in their possession. They are heavily targeting tax evasion by residential landlords, and the penalties for any undisclosed income they find later on can be significant. For this reason, it’s always wise to stay compliant and declare your unpaid income voluntarily under the Let Property Campaign.

What If HMRC disagrees with the disclosed information?

There’s every possibility that your voluntary Let Property Campaign will be subject to further disclosure. In case they reject your submission or request further details, be sure to have all relevant documentation on hand to support your claims. It’s also advisable to be prepared for negotiations or appeals to HMRC if there is a major disagreement. Your Let Property Accountant will help with that.

Seek professional advice

If you are a UK landlord, we strongly recommend doing a voluntary Let Property Campaign disclosure with the help of a specialist accountant. At Golding, we can guide you through the entire Let Property Campaign process, from signing you up to performing accurate calculations to representing you in case of a dispute. Book a call with us today to know more.

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