HMRC is writing to landlords where information it holds from third parties does not appear to match their tax records.
The letters encourage taxpayers to review whether they have declared all income from letting property and remind them of possible obligations under Making Tax Digital for Income Tax.
HMRC says it receives details from a range of sources, including tenancy deposit schemes, and is using that information to identify landlords who may need to make a disclosure. Anyone who receives a letter should check their position carefully and respond by the deadline stated.
What landlords should do
Landlords should review their rental income, expenses and any previous tax returns to confirm whether everything has been reported correctly. If there is income to disclose, HMRC’s letter explains the steps to take. If there is nothing to declare, landlords should still contact HMRC using the details in the letter.
Delaying action could increase the risk of HMRC opening a compliance check or criminal investigation. If that happens, any later disclosure may be treated as prompted, which can lead to higher penalties.
Even genuine mistakes or historic oversights can result in penalties, particularly where rental income has been omitted, an inherited property has subsequently been let, or income from jointly owned properties has not been reported correctly. We also frequently see missed capital gains tax reporting obligations following a property sale, as well as landlords who are unaware of the upcoming requirements under Making Tax Digital. Identifying and addressing these issues early can help reduce the risk of enquiries, penalties and unexpected tax liabilities in the future.
MTD and capital gains tax reminders
The letters also remind landlords that capital gains tax may be due within 60 days if a let property has been sold.
Landlords may also need to prepare for Making Tax Digital for Income Tax if their combined gross income from property and self-employment exceeds the relevant thresholds.
From April 2026, MTD for Income Tax applies to those with qualifying income over £50,000 for 2024/25. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
How we can help
If you have received a letter from HMRC, or you are unsure whether your property income has been reported correctly, speak to us before responding. We can help you review your position, make a disclosure where needed, and prepare for your MTD obligations.
