Undeclared rental income, and how to put it right

Where you probably are right now

Most people who need this page did not set out to hide anything. A property was inherited and let out. A flat was kept when someone moved in with a partner. A job took someone abroad for four years and the house was let to cover the mortgage. A room became a whole floor. In each case there was a moment where a return should have been filed and was not, and every year since has made the first conversation harder to start.

The practical point is that the position gets worse with time, not better, and that the difference between disclosing and being found is large.

What the Let Property Campaign is

The Let Property Campaign is HMRC's voluntary disclosure route for individual landlords of residential property with undeclared rental income. It exists because HMRC would rather have people come forward than chase them, and it gives a defined process for doing so.

Two boundaries are worth stating at the outset. It is for individuals, so if the income sits in a company the campaign is not your route. And it is for residential property.

The reason to use it is stated plainly by HMRC: disclosing before HMRC finds out avoids the higher penalties and the possibility of criminal prosecution that follow when they get there first. That is the whole trade. You are exchanging a difficult few weeks now for a materially better outcome than the alternative.

The mechanics, and the 90-day clock

The process has two distinct stages, and the gap between them is where the work happens.

• Notify HMRC that you intend to make a disclosure.
• Calculate and pay within 90 days of the acknowledgement of that notification.

Ninety days sounds generous and is not. Within it you have to establish how many years are in scope, reconstruct the income and the allowable expenses for every one of those years, compute the tax, and pay. If the letting ran for several years, if the property was jointly owned, if there were mortgage interest and agents' fees and a period of refurbishment, that is a real piece of work — and it runs faster and produces a lower number when the records are assembled before the clock starts rather than after.

This is the single most important practical point on this page. Notification starts a deadline. Nothing stops you doing the gathering first.

What to gather before you notify

Aim for a complete file per property, per tax year.

• Bank statements for every account that received rent, covering the whole period. Rent paid in cash or into a family member's account still counts.
• Tenancy agreements, which fix the rent and the dates and settle arguments about void periods.
• Letting agent statements, which usually give gross rent and commission in one document and are the fastest way to rebuild a year.
• Mortgage interest certificates — annual statements showing interest separately from capital.
• Invoices for repairs, maintenance, safety certificates and insurance.
• Completion statements for the purchase and for any sale, since a disposal brings capital gains into the picture as well.
• Evidence of ownership — whose name the property is in, and in what shares.

How many years HMRC will want depends on how the omission came about, and that assessment is one of the things to settle properly before the notification goes in. It is not a number to guess at on a form.

Why the records change what you pay

Tax is charged on profit, not on rent. Without evidence of the expenses, a disclosure defaults towards being taxed on something much closer to the gross figure, and interest and penalties are calculated on the tax — so a poorly evidenced disclosure is expensive twice.

Worked example — illustrative, on 2026/27 rates. A higher-rate taxpayer let a flat for four years. Rent was £12,000 a year, allowable expenses were £3,500 a year, and mortgage interest was £4,000 a year.

The difference is £5,600 of tax across four years, before any interest or penalties, and it turns entirely on whether the expenses can be evidenced. Note also that the mortgage interest does not come off the profit at all: individual landlords of residential property get a basic rate tax reducer instead, worth 20% of the lowest of the finance costs, the property profits and adjusted total income above the personal allowance. That is Section 24, in force in full since 6 April 2020, and it applies to the years being disclosed just as it applies to the current one. Our Section 24 guide explains the mechanism.

Deliberately absent from that example: any penalty percentage. Penalties depend on the behaviour behind the omission and on the quality of the disclosure, and a number invented on a web page would be worse than no number at all.

Two reliefs that mean some people owe nothing

Before assuming there is a liability, establish whether either of these covers you.

• The property income allowance is £1,000, from 6 April 2017. Below £1,000 of property income there is full relief and no need to report it. Above it, you may deduct up to £1,000 instead of your actual expenses. It cannot be used if you claim the Section 24 finance cost tax reducer, and not against rent-a-room income.
• Rent a Room relief is £7,500 a year, halved to £3,750 where the income is shared with someone else. It covers furnished accommodation in your own home and applies to resident landlords and to B&B and guest house operators. It cannot be used for homes converted into separate flats. Below the threshold it is automatic; above it you opt in, or out, on the tax return.

If a jointly owned property is involved, the default 50:50 split for spouses and civil partners under section 836 of ITA 2007 governs how the income is divided for the years being disclosed — see our guide to jointly owned property and Form 17, because it decides whose disclosure it is and how much each of you owes.

Why this is the moment to involve an accountant

Not every tax job needs one. This one does, and specifically before you contact HMRC rather than after.

• The scope decision comes first. How many years, and on what basis, shapes everything that follows. It is settled once, at the start.
• The 90 days start when the acknowledgement arrives. Work done before that is work you are not doing against a clock.
• Expenses are where the number moves. Reconstructing four or six years of allowable costs from bank statements and agent reports is exactly the kind of work that pays for itself, as the example above shows.
• A disposal changes the shape of the problem. If a property was sold, capital gains reporting and its own deadlines come into it alongside the income tax.
• The forward position has to be fixed too. A disclosure that puts the past right and leaves the current year unreported has solved half a problem.

On that last point: whatever happens with the past, the records have to work from now on. Making Tax Digital for Income Tax began on 6 April 2026 for landlords with qualifying income over £50,000, with over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028, and qualifying income is measured on gross rent, not profit. Our property bookkeeping service is built around keeping digital records per property so that a disclosure is a one-off event rather than the start of a pattern, and the MTD guide explains what the reporting cycle involves.