HMRC has been running the Let Property Campaign for over 12 years to make sure landlords who earn income by letting out residential property pay the correct tax in the UK.
The campaign pulled in a record £107 million in 2024–2025, which was over 60% more than the previous year. However, the number of voluntary disclosures actually fell from 11,000 to below 8,000.
With larger amounts being paid, this highlights the risk of ignoring nudge letters from HMRC, as the more you owe in outstanding tax, the greater the interest and penalties will be.
Here are some common mistakes that landlords should avoid when paying tax on rental income.
Common mistakes by residential landlords
Some tax errors are caused by deliberate evasion, but it can be easy to misunderstand property letting rules and pay the wrong amount of tax by accident. Common situations include:
- Renting out an inherited property – If the landlord only lets a single property after inheriting it, they may not realise that they still need to declare the income from this to HMRC.
- Moving in with a partner and renting out the other property – If someone moves into their partner’s home and lets their previous property, even if the rent only covers the mortgage payments so there isn’t really any profit, only the interest will qualify for tax relief.
- Purchasing a property for a child in university – A parent might purchase a property for their child to live in rent-free while studying at university. However, if the child allows rent-paying friends to move in with them, this income must then be declared to HMRC.
Capital expenditure can also confuse landlords when declaring taxable income, as only like-for-like replacements are deductible expenses, while significant property upgrades are not.
Do you need to make a voluntary disclosure?
This HMRC campaign only applies to landlords of residential properties and doesn’t apply to companies or commercial properties. Voluntarily disclosing untaxed rental income will make penalties more lenient.
More information about the Let Property Campaign is available on the government website to help you understand whether you need to make a disclosure, how to do this, and how to pay HMRC.
In some cases, as letting platforms provide information directly to HMRC, the tax agency may send nudge letters to prompt landlords to double-check their rental income and tax liabilities.
Whether you’ve already received a letter from HMRC or you think you may have declared the wrong amount, whatever the reason, you can seek help from a professional tax adviser.
Here at gbac, we have a team of experienced accountants in Barnsley who can provide a range of tax planning and tax management services for residential landlords in the UK.
To learn more, call 01226 298 298, or email your details to info@gbac.co.uk and we’ll be in touch.