HMRC’s Let Property Campaign continues to pay dividends. In 2024/25 alone, it generated a record £107 million in previously unpaid tax from landlords, an increase of over 60% compared to the prior year.
Interestingly, the number of voluntary disclosures has dropped (from ~11,000 to under 8,000), but those who do come forward are paying significantly more. This highlights the growing importance of a HMRC rental income declaration, especially if a landlord has received an HMRC notification.
Common Mistakes That Trigger HMRC Letters
Many landlords don’t intend to evade tax; simple misunderstandings often cause issues. Some common examples:
- Inheriting a property and renting it out, unaware that the income must be declared
- Renting out a former home after becoming a couple, assuming the break-even point removes tax responsibility
- Letting a student’s room to flatmates, where the contributions cross into taxable territory
Also, claims for capital expenditure are often misapplied. Upgrades, like replacing a kitchen, usually don’t qualify unless it’s a like-for-like repair.
Who Does It Apply To?
The campaign is aimed at individual residential landlords, it doesn’t apply to limited companies or those letting commercial properties. HMRC offers more lenient penalty terms for those making a voluntary disclosure.
In recent years, HMRC’s data collection abilities have become more sophisticated, pulling in data from letting platforms and third parties, making a HMRC rental income declaration harder to overlook or ignore.
Why This Matters Now
Rising revenue from the campaign underscores that HMRC is actively enforcing it. With fewer landlords self-reporting, the consequences of non-response could become steeper.
These disclosure demands form part of a broader drive toward transparency in UK tax and company law. For instance, digital reforms are underway, the Making Tax Digital roadmap outlines how tax administration will become more real-time and data-driven.
Final Thoughts
If a landlord hasn’t fully declared rental income, or has received a letter from HMRC, it’s wise to act sooner rather than later. Careful review and voluntary disclosure may reduce penalties compared to waiting.
We’re here to help landlords across Scotland review their position, understand their options, and respond in the most informed way possible, always focused on clarity, compliance, and minimising risk.