Let Property Campaign 101

If you are a non-resident individual in receipt of UK rental income, you are legally required to declare that income to HMRC.

If you have not reported it, the HMRC Let Property Campaign offers a formal route to bring your affairs up to date. This voluntary disclosure facility is designed specifically for individual landlords, and it lets you regularise your position on better terms than you would get in a forced investigation.

This article covers the steps required to work through the campaign successfully.

The reporting requirement: a common misconception

It is a common and costly mistake to assume that if no tax is payable, because the income falls below the personal allowance, the income does not need to be reported at all.

You may well find that allowable expenses, such as maintenance, insurance and the restricted relief on mortgage interest, reduce your rental profit to the point where it sits below the personal allowance. Even then, as a non-resident landlord the income is still reportable to HMRC.

The Let Property Campaign as a mechanism for correction

The Let Property Campaign is the official route HMRC provides for landlords to report previously undisclosed rental income. Whether you have a single property let for a few years, or a larger residential portfolio, it is the safest way back into compliance.

HMRC now receives automated data from letting agents, Airbnb, Booking.com and other platforms, so the window for making an unprompted disclosure is narrowing. Using the campaign proactively lets you regain compliance on your own terms rather than HMRC’s.

How far back do you need to go?

One of the first questions landlords ask is how many years a disclosure has to cover. The answer depends on the behaviour that led to the non-disclosure.

Image 1 — the disclosure period by behaviour

For most standard cases, where there has been a failure to take reasonable care, you will need to go back six years from the end of the relevant tax year. Where reasonable care was taken and the error was genuinely innocent, the period is four years. Where the failure was deliberate, HMRC can go back twenty.

⚠️ WARNING  If you never notified HMRC that you had a source of income at all, rather than filing a return that understated it, HMRC can assess as far back as twenty years. Failure to notify is treated more seriously than an error on a return you did submit, so a landlord who has simply never told HMRC about a rental property can face a much longer disclosure period than the usual six years.

The five step process

Working through the campaign takes a methodical approach, so that the final submission is accurate and holds up. The process runs from initial notification to HMRC’s acceptance letter.

Image 2 — the five steps and the 90 day window

1. Make a notification

The first step is to notify HMRC formally that you intend to make a disclosure. This is a straightforward digital notification that alerts the Let Property Campaign team you are preparing your figures. HMRC will then send you a Disclosure Reference Number.

This is the point at which the clock starts. Once HMRC acknowledges your notification, you have 90 days to complete the calculations, submit the disclosure and pay what you owe.

You can notify HMRC that you intend to make a disclosure.

2. Gather records and complete calculations

Gather all the relevant financial records, including bank statements showing rental receipts and receipts for allowable expenses. You then calculate the net profit for each tax year in question. This step is often complex for expats, because you need to apply the rules that were in force for each specific year, particularly the phased finance cost restriction.

3. Prepare the disclosure

With the calculations finalised, prepare the formal submission. This sets out the tax due, the interest accrued on that tax, and the penalty you are offering. You also provide a short explanation of why the income was not previously declared. That narrative matters, because it supports the penalty percentage you have chosen.

4. Pay what you owe

Once the disclosure is submitted you pay the total calculated at step three. If you cannot pay in one sum, it may be possible to agree a Time to Pay arrangement with HMRC, provided you can demonstrate genuine difficulty.

5. Wait for HMRC to accept

After submission HMRC reviews the disclosure. If they are satisfied the information is complete and the behaviour has been correctly categorised, they issue an acceptance letter. That letter confirms your affairs are up to date for the period covered.

Understanding penalties and mitigation

The cost of a disclosure is not limited to the unpaid tax and interest. The penalty depends on the behaviour behind the failure, and on whether the disclosure is unprompted or prompted.

●       Reasonable excuse.  Where you intended to comply but something genuinely outside your control prevented it, HMRC may accept there is no penalty at all.

●       Careless.  You failed to take reasonable care. For an unprompted disclosure the penalty typically falls in the 0% to 30% range.

●       Deliberate.  You knew you had an obligation and chose not to meet it. Penalties rise substantially from here, and can reach 100% where the failure was also concealed.

Mitigation is available by cooperating fully. HMRC assess this as telling, helping and giving access, meaning disclosing everything, assisting with valuations and questions, and providing records when asked. Doing all three moves you toward the lower end of the range that applies.

Failure to notify penalties.

Inaccurate return penalties.

The strategic advantage of voluntary disclosure

Coming forward voluntarily is almost always better than waiting to be found. The main benefits are:

●       Lower penalties.  Unprompted disclosures attract materially lower penalty percentages than positions discovered through an HMRC investigation.

●       Avoiding prosecution.  Criminal investigation is rare in standard rental cases, but a voluntary disclosure effectively removes the risk.

●       Certainty.  Waiting for a letter to arrive is its own burden. Completing the process gives you a defined end point and a written confirmation.