HMRC recovered more than £100m in unpaid tax from landlords during 2025-26 after stepping up its use of property data to identify undeclared rental income.
Figures obtained by accountancy firm Price Bailey show 11,511 landlords voluntarily disclosed previously undeclared rental income through HMRC’s Let Property Campaign – the highest number since 2018-19. The average disclosure resulted in a payment of £9,063.
The £104.3m recovered is almost three times the £36.8m collected in 2019-20 and marks the third consecutive year that receipts have exceeded £100 million.
HMRC has increasingly used Land Registry data to identify owners of multiple residential properties who may have failed to declare rental income. Those identified are sent “nudge letters” encouraging them to review their tax affairs and make voluntary disclosures where necessary.
Price Bailey said one area that continues to cause confusion is the distinction between capital and revenue expenditure. While replacing an existing kitchen on a like-for-like basis is generally tax deductible, upgrading it to a significantly higher specification may not qualify for the same treatment.
The firm also warned that recent tax changes have made compliance more complex for landlords managing their affairs without professional advice.
From April 2026, Making Tax Digital for Income Tax requires quarterly reporting for landlords and sole traders with combined gross property and self-employment income above £50,000, with the threshold due to fall to £20,000 from April 2028.
Other recent changes include a reduction in the annual Capital Gains Tax exemption to £3,000, higher CGT rates on residential property disposals, and corporation tax rates of between 19% and 25% for landlords operating through limited companies.
Andrew Park, tax investigations partner at Price Bailey, commented: “HMRC’s data‑matching capability has become relentless. Most voluntary disclosures are now prompted by HMRC nudge letters, and we are seeing a clear trend in larger numbers of smaller cases. HMRC is casting the net wider and catching landlords who may only have modest rental income but still have undeclared tax liabilities.”
“Many of the people being caught out are accidental landlords — people who kept a property after moving in with a partner, inherited a property, or temporarily moved abroad. They are often genuinely unaware that they have taxable profits to disclose.”
He added: “A lot of landlords continue to be caught by the ‘phantom profit’ effect. Since mortgage interest relief was withdrawn, taxable profit can appear even when there is little or no real‑world profit. That mismatch is still driving arrears and compliance failures.”
