HMRC recovered £104m from 11,511 UK landlords in 2025/26. The average recovery per disclosure fell from £13,713 to £9,063. More landlords, lower individual amounts. When the average per case falls while the total holds, HMRC has not run out of targets. It has moved into a different tier of the market.
What Has Happened?
HMRC published its Let Property Campaign statistics for 2025/26 last week. The campaign generated 11,511 voluntary disclosures, the highest count since 2018/19. Total recovery from those disclosures was £104 million, the third consecutive year above £100 million. The average recovery per disclosure fell from £13,713 in 2024/25 to £9,063 in 2025/26.
The Let Property Campaign has been running since 2013. It is HMRC's voluntary disclosure route for landlords who have not fully declared rental income in their self-assessment returns. Landlords who use the campaign proactively, before HMRC makes contact, access reduced penalty rates, typically 10% to 30% of the undeclared tax on top of the tax itself and accrued interest. The penalty rate climbs to 30% to 100% once a formal HMRC investigation is opened. Using the campaign before receiving a nudge letter secures not just lower penalties but also control over how the disclosure is structured and which years are included.
HMRC's enforcement methodology works through data cross-referencing. The department compares Land Registry ownership records against self-assessment submissions. Where someone owns multiple residential properties but is not declaring rental income, HMRC sends what it calls a nudge letter encouraging voluntary disclosure. Credit reference agency records that flag addresses with multiple tenants at properties not recorded as let add another data layer.
The timing of this publication matters. April 2026 was the first month Making Tax Digital for Income Tax required quarterly income reporting from landlords with combined gross property and self-employment income above £50,000. The 2025/26 enforcement result was produced without that quarterly data feed. From 2026/27 onward, HMRC receives quarterly income reports from that first cohort alongside the existing Land Registry cross-check. The enforcement data environment has changed, and the 2025/26 figures are the last set produced under the old methodology alone.
Why This Matters to UK Property Investors
The average recovery falling from £13,713 to £9,063, against a simultaneous rise in disclosure volume, is the key signal. Landlords being identified and nudged into disclosure are not primarily ten-property portfolio operators. They are investors with one, two, or three properties who either never registered for self-assessment, or registered and filed returns that omitted the rental income. That tier has historically been underpenetrated by the campaign. The 2025/26 figures suggest HMRC has moved it into scope.
The cumulative Let Property Campaign total across all years since 2013 is substantial. Three consecutive years above £100 million, against a landlord population that has been contracting numerically, means the recovery rate per available target is rising, not flat. For a landlord not yet contacted who has underdeclared for two or more years, the absence of a nudge letter is not a clean bill of health. It is more likely a position in the Land Registry processing queue.
Making Tax Digital sharpens this arithmetic considerably. A landlord currently above the £50,000 gross income threshold is filing quarterly reports to HMRC from April 2026. The threshold drops to £30,000 in April 2027 and to £20,000 in April 2028. At £20,000, a single property renting for £1,667 per month brings the landlord into quarterly reporting. For much of the South East and London, that catches landlords with a single property. The historical underdeclaration from prior years does not disappear when a landlord starts filing through MTD. It sits alongside the new quarterly data as a gap that HMRC's systems can compare against.
Capital gains on property disposals carry a related exposure that runs separately. Since April 2020, residential property CGT must be reported and the tax paid within 60 days of completion. HMRC has been comparing conveyancing data from SDLT returns against CGT filings. A landlord who sold a buy-to-let property between 2020 and 2025 without completing a 60-day CGT return has an open enforcement risk on top of any rental income issue. Two separate streams, not one.
The Risks Investors Need to Understand
The Let Property Campaign lookback period runs four to six years for what HMRC classes as careless non-disclosure. For deliberate non-disclosure, it extends to twenty years. HMRC makes its own assessment of which standard applies. A landlord who registered for self-assessment and consistently omitted rental income from filed returns faces a weaker carelessness argument than someone who was unaware they needed to register at all. Neither position is comfortable.
On a property generating £750 per month in rent, six years of undeclared income at the 40% higher-rate band produces a back-tax figure of approximately £21,600. Add interest at HMRC's current rate (approximately 7.5% per annum, compounding from when each year's tax became due) and a voluntary disclosure penalty of 15% to 25%, and the total exposure runs to roughly £27,000 to £35,000 for six years. In a formal investigation rather than a voluntary disclosure, the penalty component alone doubles or more. The professional cost of managing a formal enquiry over twelve-plus months adds further.
Receiving a nudge letter and not responding substantially increases the risk of formal enquiry. Once HMRC opens an investigation, the Let Property Campaign's reduced penalty rates are no longer available for that particular case. The nudge letter is the last point at which the landlord can re-enter the campaign on favourable terms. After that, control passes to HMRC.
There is a broader investigation risk that catches some landlords by surprise. A formal HMRC enquiry opened because of undeclared rental income does not stay narrowly focused on rental income. HMRC has the authority to examine the landlord's full tax affairs across the enquiry period. Issues with other income sources, prior CGT returns, or pension contributions can surface through the same process. A carefully managed voluntary disclosure through the campaign is a contained exercise. A formal investigation is not.
Where the Opportunity Could Be
The most direct action is a Let Property Campaign disclosure made before HMRC makes contact. For a landlord who has underdeclared rental income for three, four, or five years, doing this now means accessing the lowest available penalty rates and controlling how the disclosure is constructed. A specialist property tax advisor will identify the allowable deductions for each underdeclared year, letting agent fees, maintenance and repairs, insurance, and the Section 24 mortgage interest credit at the applicable 20% basic-rate figure, and apply them correctly before calculating the liability. That process typically reduces the taxable income for each year considerably below the gross rent figure that a non-advised landlord might assume forms the full liability.
A limited company structure removes the personal income underdeclaration risk for new acquisitions. Properties held in a limited company are assessed to corporation tax at 19% to 25% rather than income tax at 20% to 45%. The company files annual corporation tax returns, and the income flows through a corporate structure rather than self-assessment. The Let Property Campaign targets personal rental income. A properly constituted limited company acquiring new BTL properties from this point forward does not generate that category of risk going forward. It does not fix historical personal income non-disclosure from years before incorporation, which remains a personal liability.
There is a secondary market angle worth noting. Landlords who receive significant HMRC back-tax bills sometimes sell properties to fund the liability. I have seen it happen in my network. It is not a large volume and it is not evenly distributed. The markets where smaller-portfolio landlordism is most concentrated, parts of the North East, East Midlands, and West Yorkshire, are where this type of exit is most likely to generate motivated-seller stock. Not a systematic buy strategy. But if a property comes to market in those areas with a seller who needs to move quickly, the context is worth understanding.
For compliant landlords, the enforcement cycle also has a competitive dynamic. Investors who have been operating with undeclared income have carried a lower effective cost base than fully compliant operators. As enforcement catches more of that group, either forcing disclosure payments or market exit, the competitive landscape for compliant, professionally structured landlords improves over time. That is a long-run benefit, not a near-term one. I mention it because the compliance work being forced on some operators is genuinely pricing them out of markets where professionally managed BTL still works.
Arsh's Investor View
The number I keep coming back to is the average recovery falling from £13,713 to £9,063 while the volume rose to 11,511. I have been through enough HMRC campaigns to know what that combination usually means. The agency has worked through the higher-value targets in the landlord population and is now operating at scale on the smaller end. When HMRC is finding 11,511 cases in a year and averaging nine grand per case, it has built a systematic, high-throughput operation, not a team of investigators picking cases by hand. The nudge-letter-to-disclosure pipeline is working efficiently.
The MTD angle is genuinely important and I think most landlords are not thinking about it clearly. The 2025/26 recovery was produced using Land Registry data and self-assessment cross-referencing, the same approach that has been running for years. From April 2026, the first MTD cohort above £50,000 is filing quarterly income reports. By April 2028, landlords above £20,000 join them. HMRC's enforcement team will eventually have quarterly income data flowing in from a large proportion of all UK landlords. That does not mean they will catch everything immediately. But the data environment in 2028 is going to look materially different from the one that produced this year's figures. The Let Property Campaign window is not closing tomorrow. It is narrowing over a two-year period, and anyone who has something to disclose is best served by using the campaign before the quarterly data creates a more visible and more current picture of their income.
My advice is simple. If you have not declared rental income fully for any year since 2019, use the campaign. Not because I think HMRC will definitely find you next month. They might not. But the terms available to you right now through the campaign are the best you will get, and they get worse if HMRC contacts you first. A specialist property tax accountant who works regularly with the Let Property Campaign can run the numbers before you commit to a disclosure, so you know the likely total before you file. That is not a big engagement. Most advisors can give you a reasonable estimate within a few hours' work on the relevant years.
One thing I want to say directly. I hear landlords say they will move properties into a limited company and that fixes it. It fixes the future. It does not fix the past. Historical personal income from before incorporation is still a personal liability, and HMRC's lookback runs against the individual regardless of what structure they operate in now. Get the historical position resolved through the campaign, then look at structure for what you acquire next.
How Property Investor App Can Help
Property Investor App connects UK landlords and property investors with specialist property tax accountants and BTL advisors who understand the Let Property Campaign, Making Tax Digital quarterly reporting requirements, Section 24 mortgage interest credit calculations, and the full cost-benefit analysis of limited company versus personal ownership for both existing and new portfolios. For landlords who want to understand their current tax exposure before HMRC makes contact, PIA can connect you with advisors who work exclusively with property investors and who can calculate a likely voluntary disclosure figure and advise on how to structure it for the most favourable outcome. For investors looking for live BTL acquisition opportunities in northern and Midlands markets, including deals that arise from motivated-seller exits, PIA provides deal data with yield estimates, comparable rents, and property condition information across key markets in the North East, Yorkshire, and the West Midlands. Browse live UK buy-to-let investment opportunities at Property Investor App.
Key Takeaways
- HMRC recovered £104 million from UK landlords in 2025/26 through the Let Property Campaign, the third consecutive year above £100 million. The number of voluntary disclosures rose to 11,511, the highest since 2018/19. The average recovery per disclosure fell from £13,713 to £9,063. The pattern of rising disclosure volume at lower individual amounts indicates HMRC's enforcement focus has expanded into smaller portfolio holders, not contracted from them.
- HMRC identifies non-compliant landlords by cross-referencing Land Registry property ownership records with self-assessment filings, supplemented by credit reference agency data that flags residential addresses with multiple tenants at undeclared let properties. Identified individuals receive nudge letters. Landlords who respond through the Let Property Campaign access penalty rates of 10% to 30% of undeclared tax. Formal investigations carry penalty rates of 30% to 100%.
- The Let Property Campaign lookback period is four to six years for careless non-disclosure and up to twenty years for deliberate non-disclosure. On a property generating £750 per month in rent, six years of undeclared income at the 40% tax rate produces an approximate pre-penalty tax liability of £21,600, rising to £27,000 to £35,000 after interest and voluntary-disclosure penalties. A formal investigation typically pushes the total higher, plus professional costs over twelve or more months.
- Making Tax Digital for Income Tax required quarterly income reporting from April 2026 for landlords with combined gross income above £50,000. The threshold falls to £30,000 in April 2027 and to £20,000 in April 2028. From April 2028, a landlord with a single property generating £1,667 per month enters the quarterly reporting regime. HMRC receives direct quarterly income data from the growing MTD cohort, supplementing the existing Land Registry cross-check approach.
- Capital gains on residential property disposals must be reported and paid within 60 days of completion under rules in force since April 2020. HMRC cross-checks conveyancing records from SDLT submissions against CGT filings as a separate enforcement stream from the Let Property Campaign. A landlord with both undeclared rental income and an unfiled residential property CGT return on a disposal since April 2020 faces two separate enforcement exposure points.
- A limited company structure eliminates the personal income underdeclaration risk for properties held within the company going forward, since the company files corporation tax returns rather than income tax self-assessment. It does not resolve historical personal rental income from years before incorporation. Landlords who have incorporated should address historical personal exposure through the Let Property Campaign separately from their current corporate structure.
Frequently Asked Questions
What is HMRC's Let Property Campaign?
The Let Property Campaign is HMRC's ongoing voluntary disclosure scheme for landlords and individuals with undeclared or underdeclared rental income. Running since 2013, it allows landlords to bring their tax affairs up to date at reduced penalty rates. Proactive disclosures made before HMRC makes contact typically attract penalties of 10% to 30% of the underdeclared tax, on top of the tax itself and interest from when each year's liability arose. Disclosures made after HMRC has sent a nudge letter but before formal investigation can still access campaign terms, though at the higher end of the penalty range. Once a formal HMRC enquiry is opened, campaign penalty rates are no longer available. In 2025/26 the campaign generated 11,511 voluntary disclosures and recovered £104 million, the third consecutive year above £100 million.
How does HMRC identify landlords who have not declared rental income?
HMRC cross-references Land Registry ownership records against self-assessment returns to identify individuals owning residential properties who are not declaring rental income. Credit reference agency data that flags addresses with multiple tenants at properties not recorded as let provides an additional check. Where HMRC identifies a likely gap, it sends a nudge letter. Since April 2026, Making Tax Digital quarterly income reports from landlords with gross income above £50,000 give HMRC a direct income data feed supplementing the Land Registry approach. The MTD income threshold falls to £30,000 in April 2027 and £20,000 in April 2028, bringing progressively more of the landlord population into automatic quarterly reporting.
What happens if I ignore an HMRC Let Property Campaign nudge letter?
Not responding to a nudge letter substantially increases the risk of a formal HMRC enquiry. A formal enquiry removes access to the Let Property Campaign's reduced penalty rates for the affected years. Once an enquiry is opened, penalties on the undeclared tax rise from 10% to 30% in a voluntary disclosure to 30% to 100% in a formal investigation, with rates rising further where HMRC judges the non-disclosure to have been deliberate rather than careless. Formal enquiries also run on HMRC's timeline, typically twelve months or more, creating sustained administrative and professional cost on top of the tax liability. A landlord who responds through the Let Property Campaign after receiving a nudge letter, but before a formal enquiry notice, still accesses better terms than a formal investigation.
Does Making Tax Digital affect my Let Property Campaign exposure?
Making Tax Digital for Income Tax, live from April 2026 for landlords with gross income above £50,000, creates a quarterly income data feed directly to HMRC. This does not retrospectively reveal pre-April 2026 underdeclarations through the MTD system itself, but it does mean HMRC will receive ongoing quarterly data from the covered cohort and can compare it against historical self-assessment records in near real time. A landlord in the MTD cohort who is also carrying historical underdeclarations is filing current income that sits alongside a historical gap, making the gap more visible over time. Addressing the historical exposure through the Let Property Campaign before the quarterly data creates a clearer current picture is generally advisable. MTD disclosures cover the period from April 2026 onward. The Let Property Campaign addresses historical years separately.
Does a limited company structure protect me from the Let Property Campaign?
A limited company that holds and lets property files corporation tax returns rather than income tax self-assessment, so the personal income underdeclaration risk that the Let Property Campaign addresses does not apply to property held within the company going forward. However, a limited company structure does not resolve historical personal rental income from years before incorporation. If you held properties personally between, say, 2019 and 2025 and did not declare the income, that liability remains against you as an individual regardless of what company structure you operate through now. Incorporation from this point fixes the structure for new acquisitions. The historical personal exposure needs to be addressed through the Let Property Campaign separately.
