If you’re a landlord with undeclared rental income, HMRC is stepping up its efforts in 2025 to identify and recover unpaid taxes. With increased data-sharing agreements, advanced technology, and the ongoing Let Property Campaign, thousands of property owners across the UK are being contacted about unpaid rental earnings.
Failure to declare rental income can result in hefty fines, tax investigations, and even legal action. If you’re a landlord, now is the time to act before HMRC comes knocking.
Why is HMRC Targeting Landlords in 2025?
HMRC has been targeting landlords for years, but in 2025, the pressure is higher than ever. The government is keen to close the tax gap, and rental income is a prime focus. Here’s why:
➡️ Online Platforms Must Report Earnings – Since January 2025, platforms like Airbnb, Booking.com, and Vrbo are legally required to share host income data with HMRC.
➡️ AI and Data Analytics – HMRC uses advanced technology to cross-check rental income against Land Registry records, mortgage data, bank transactions, and tenancy deposit schemes.
➡️ Public Tip-Offs – HMRC encourages neighbours, tenants, or ex-business partners to report suspected undeclared rental income.
➡️ The Let Property Campaign – This campaign allows landlords to voluntarily disclose unpaid taxes with reduced penalties.
📩 How is HMRC Contacting Landlords?
Many landlords are now receiving nudge letters from HMRC, warning them that they may not have declared all their rental income. These letters usually include:
➡️ A request to review past tax returns and correct any errors
➡️ A warning about potential penalties for non-disclosure
➡️ A deadline to respond before a full investigation begins
⚠️ Important: Do not ignore these letters. Doing nothing could result in large backdated tax bills, penalties, and even prosecution.
💰 What Are the Penalties for Undeclared Rental Income?
If you fail to come forward voluntarily, HMRC can impose:
🚨 Penalties of 10% to 100% of unpaid tax (or up to 200% for offshore income)
🚨 Backdated tax bills covering up to 20 years
🚨 Interest charges on unpaid tax
🚨 In serious cases, criminal investigation
The best way to reduce these risks is to act before HMRC contacts you.
💰 What Are the Penalties for Undeclared Rental Income?
If you fail to come forward voluntarily, HMRC can impose:
🚨 Penalties of 10% to 100% of unpaid tax (or up to 200% for offshore income)
🚨 Backdated tax bills covering up to 20 years
🚨 Interest charges on unpaid tax
🚨 In serious cases, criminal investigation
The best way to reduce these risks is to act before HMRC contacts you.
If you have undeclared rental income, here’s what to do:
1️⃣ Use the Let Property Campaign
Notify HMRC, calculate what you owe, and make payment within 90 days. This gives you reduced penalties and peace of mind.
2️⃣ Check Your Records
Review:
➡️ Long-term rentals (buy-to-let)
➡️ Short-term lets (Airbnb, Vrbo, Booking.com)
➡️ Rooms rented out in your home (even under Rent a Room Scheme)
3️⃣ Get Professional Advice
We help landlords prepare full Let Property Campaign disclosures. We offer competitive, fixed-fee quotes so you know the cost upfront.
4️⃣ Register for Self Assessment
If you’ve not yet registered, we can do this free of charge for landlords – click here to register for free.
5️⃣ Keep Future Tax Affairs in Order
✅ Report all rental income on your tax return
✅ Claim property tax allowances correctly
✅ Put money aside for tax payments
✅ Stay up-to-date with HMRC guidance
💡 Final Thoughts: Act Now Before HMRC Contacts You
HMRC is actively investigating landlords in 2025 using data from banks, online platforms, and the Land Registry. If you have undeclared rental income, coming forward voluntarily is always better than waiting to be caught.
📞 Need help disclosing rental income? Our expert team at Taxwise Accountancy can guide you through every step. From calculating your tax liability to submitting a full disclosure to HMRC.
👉 Get in touch today for confidential advice, free no obligation 30 mins consultation with our property tax expert and fixed-fee support.
