Of all the multi-year arrears situations, undisclosed rental income is the one with the cleanest disclosure route. HMRC operates a dedicated Let Property Campaign for residential landlords, with reduced fixed-percentage penalties and a structured submission process. The campaign has been running for over a decade and HMRC actively encourages its use. The result: landlords who come forward through the LPC end up in a materially better position than those who wait to be discovered through HMRC's data-matching against the Land Registry, letting platforms, and the Tenancy Deposit Scheme.
This guide covers the LPC end to end, plus the adjacent issues that come up alongside any landlord disclosure: the 60-day CGT rule on property sales, Section 24 mortgage interest restrictions, SDLT refund opportunities, the Non-Resident Landlord Scheme, and the recent changes to Furnished Holiday Lets. Each section links to a detailed companion piece.
HMRC has visibility on your rental income whether you disclosed it or not
Letting platforms (Airbnb, Vrbo, OpenRent), the Tenancy Deposit Schemes, the Land Registry, and increasingly the council tax and HMO licensing registers all feed data into HMRC's Connect system. If you have rented residential property in the UK in the last decade and not disclosed the income, HMRC almost certainly has data points that flag the position. The question is when, not whether, they will act.
The Let Property Campaign — what it is and why it works
The LPC is HMRC's dedicated voluntary disclosure facility for individual landlords with undisclosed UK residential rental income. The structure is straightforward:
- 1Notify HMRC of intent to disclose. This locks in the unprompted disclosure status (lower penalty band).
- 2You then have 90 days to calculate and submit the full disclosure: years involved, income per year, allowable expenses, tax due, interest, and proposed penalty position.
- 3HMRC reviews the disclosure and either accepts it or comes back with queries.
- 4Tax, interest, and penalties are paid (or a Time to Pay arrangement is agreed alongside).
For most landlords, the LPC penalty position lands at the lower end of the prompted/unprompted bands: typically 0% to 10% of the tax due for careless behaviour disclosed unprompted. On a five-year exposure of £20,000 of tax, the LPC penalty is a few hundred pounds rather than thousands.
Expenses landlords routinely miss in the disclosure
Reconstruction of rental expenses for prior years often recovers material deductions that were never tracked. The categories that come up most frequently:
- Mortgage interest (subject to Section 24 restrictions for residential — discussed below).
- Letting agent fees including initial set-up and re-let fees.
- Insurance: buildings, contents, landlord-specific liability, rent guarantee.
- Repairs and maintenance: distinguished from capital improvements. The repair test is whether the work restored the property to its prior state.
- Council tax during void periods.
- Utilities paid by the landlord (where leases are inclusive).
- Travel to the property for inspection, repair coordination, or tenant management at HMRC mileage rates.
- Accountancy fees for the rental accounts.
- Replacement of domestic items (furniture, appliances) for furnished lets at the like-for-like cost.
- Mortgage broker fees and remortgage costs (treated as interest).
Section 24 and the mortgage interest restriction
Since April 2020, residential landlords cannot deduct mortgage interest as an ordinary expense. Instead, mortgage interest produces a 20% basic-rate tax credit. For higher-rate taxpayers this is materially less generous than the previous full deduction. For a landlord catching up on multi-year arrears, the Section 24 calculation needs to be applied year-by-year, with the right rules for each year:
Section 24 phase-in by tax year
| Tax year | Mortgage interest treatment |
|---|---|
| 2017-18 | 75% as expense, 25% as 20% tax credit |
| 2018-19 | 50% as expense, 50% as 20% tax credit |
| 2019-20 | 25% as expense, 75% as 20% tax credit |
| 2020-21 onwards | 0% as expense, 100% as 20% tax credit |
A late disclosure for a portfolio landlord across these transitional years requires getting the apportionment right per year. Companies (rather than individual landlords) are not subject to Section 24, which is one driver of the recent shift to incorporated property businesses.
The 60-day CGT rule on property sales
Since April 2020, UK residents disposing of UK residential property must file a CGT return and pay the calculated tax within 60 days of completion (extended from the original 30-day rule). For landlords catching up on multi-year arrears that include property sales, the 60-day return position needs separate attention from the Self Assessment disclosure: the CGT return is its own form, with its own penalty regime, and its own appeal route.
Capital improvements vs revenue repairs
A new boiler that replaces a broken one is a repair (deductible from rental income). A second en-suite added to the property is a capital improvement (added to the property base cost for CGT). The line is fact-specific and gets challenged in HMRC enquiries. Document the work's purpose contemporaneously — it is much harder to defend the characterisation years later from invoices alone.
The end of Furnished Holiday Lets favourable treatment
Furnished Holiday Lets (FHL) historically enjoyed a separate tax regime more generous than ordinary rental: full mortgage interest deduction, capital allowances on furniture, eligibility for Business Asset Disposal Relief on disposal. The FHL regime was abolished from 6 April 2025, with FHLs now treated as ordinary rental properties for tax purposes.
Landlords with historic FHL status need to apply the old rules for years up to 2024-25 and the new rules from 2025-26 onwards. A late disclosure straddling the change needs careful per-year treatment.
Years of undisclosed rental income? The Let Property Campaign route is open.
A specialist will assess your portfolio, run the per-year reconstructions, identify all allowable expenses, and submit through the LPC for the lowest defensible penalty position. Free initial assessment.