Let Property Campaign and registering for self assessment

The Let Property Campaign (LPC) was first introduced in 2013 and is still running in 2024.

The Let Property Campaign is a disclosure initiative offered by HMRC in the UK and is designed to help landlords notify HMRC of any irregularities associated with rental profits declared on their self assessment tax returns.

In this blog we look at the details of the Let Property Campaign, the impact it has on self assessment tax returns, how to disclose property rental income, and how to register for self assessment tax returns if you have not previously done so.

What is the Let Property Campaign?

The LPC is offered by HMRC and is aimed at anyone that earns rental income from residential property lettings. This could be residential property landlords, buy-to-let investors or individuals renting either a single or multiple properties.

It allows landlords to make a full voluntary disclosure of undisclosed rental income and unpaid tax to HMRC and to get their tax affairs in order by paying the tax due on that income.

When making such a disclosure, often the settlement terms are more preferable than if the irregularities were discovered by HMRC during a tax investigation. Such disclosure schemes tend to offer reduced penalties and improved terms.

Who can use the Let Property Campaign?

The Let Property Campaign covers all residential property including:

• Landlords and individuals earning rental income from multiple properties.
• Landlords and individuals earning rental income from single rental properties.
• Specialist landlords such as those with student or workforce rentals.
• People with holiday lettings.
• People who rent out a room in their main home for more than the Rent a Room Scheme threshold.
• People who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK and are still liable to UK taxes.
• People living in the UK and earning offshore rental income from letting out property abroad.

This campaign is not open to those landlords who are letting out non-residential properties such as a:

• shop
• garage
• lock up

You also cannot use the Let Property Campaign if you want to make a disclosure of income on behalf of a company or a trust. You should also seek guidance if you jointly own a property with your spouse or civil partner.

You can use the HMRC Let Property questionnaire to check if you need to disclose unpaid taxes under this campaign.

How can HMRC find out about my rental income?

HMRC runs a very sophisticated software system called Connect that has the ability to analyse data from numerous sources. In recent years, we’ve seen more tax enquiries and investigations opened by HMRC that look for additional income from other sources.

HMRC have a variety of sources to check if individuals receive rental incomes from property. For example, they access the land registry to identify individuals who have paid stamp duty land tax, the electoral register to see who is living at an address and then use that data to track potential rental income.

Let Property Campaign and registering for self assessment

If you receive property income but are not registered for self assessment, then you need to register for self assessment straight away. Find out more here about how to register for self assessment tax returns.

When you start to receive letting income the latest you should tell HMRC is by 5 October after the end of the tax year for which you start to receive that income.

If you have failed to notify HMRC about receiving past letting income

If, for example, you have tax to pay on rental profits in the tax year 2023/24, you need to let HMRC know by 5 October 2024.

If you have failed to register for a Self Assessment tax return by the appropriate deadline, you’ll have to pay HMRC what you owe for a maximum of 20 years.

If you have taken reasonable care to report and pay tax owed

If you registered for a Self Assessment tax return by the appropriate deadline, have taken every care to make sure your tax affairs were correct but you have made an error and paid too little tax, you will only have to pay HMRC what you owe for a maximum of 4 years.

You will be required to:

• make sure that your tax affairs for the current and later tax years are accurately reported on tax returns by the appropriate deadlines
• make sure that your tax affairs for the year prior to the current tax year are reported on the tax return that was issued to you for that year by the appropriate deadline
• complete the disclosure form and pay HMRC what you owe for the 3 years prior to this

If you did not take reasonable care to report and pay tax owed

If you registered for a Self Assessment tax return by the appropriate deadline but you have paid too little because you were careless, you’ll have to pay HMRC what you owe for a maximum of 6 years. “Careless” means a failure to take reasonable care in relation to your tax affairs.

You will be required to:

• make sure that your tax affairs for the current and later tax years are accurately reported on tax returns by the appropriate deadlines
• make sure that your tax affairs for the year prior to the current tax year are reported on the tax return that was issued to you for that year by the appropriate deadline
• complete the disclosure form and pay HMRC what you owe for the 5 years prior to this

If you deliberately misled HMRC about additional income

If you have deliberately paid too little tax, you’ll have to pay HMRC what you owe for a maximum of 20 years.

HMRC expects most people to have to pay a maximum of 6 years but there will be some who need to pay more. These are people who have either:

• deliberately told HMRC they have earned less than they have
• not told HMRC anything at all about their income

Submitting past income tax returns

Income Tax returns need to be submitted following the end of the tax year:

• 1 October for paper returns
• 31 January for online returns

So it may be that for current and prior year, you still have time to submit an accurate tax return including your rental income.

If HMRC have sent you a tax return for any tax year from 2020 to 2021 onwards that’s still outstanding, you must complete each return and not include those years in your LPC disclosure.

How do I declare and pay undisclosed income via the Let Property Campaign?

To make a LPC disclosure, you will need to:

• 1. Notify HMRC that you want to take part in the Let Property Campaign and make an LPC disclosure.
• 2. Make a disclosure to HMRC of all your undeclared income, gains, tax and duties that you may not have previously declared on past years self-assessment tax return (do not include previously declared rental income).
• 3. You should then make a formal offer to pay the full amount of the total you owe. If HMRC accept your offer to pay the full amount, it creates a legally binding contract between you.
• 4. Pay HMRC the additional tax that you owe (you should have 90 days from making a formal offer to pay the tax you owe, if you can’t pay the tax you owe you need to see if you can negotiate a time to pay arrangement with HMRC).
• 5. Assist HMRC as much as you can if they ask you for more information.

It is important that you get your disclosure right, so, if you are unsure how to work this out, contact dns accountants today to help you through the process and to avoid incurring higher penalties.

How many years should I include in my Let Property Campaign disclosure?

You should declare any years in the last 20 years that you have received undeclared property income.

Any additional tax that’s included in your disclosure will be late and so will attract an interest charge.

HMRC charges interest from the date tax is due until the date it is actually paid. Interest is worked out on a daily basis.

The law allows HMRC to go back up to 20 years and in serious cases HMRC may carry out a criminal investigation.

If you fail to include the correct interest your disclosure will be rejected as it will not be complete. There’s a calculator available to help you work out the right amount of interest due.

How do I work out what I owe under the Let Property Campaign

Calculating what you owe can be very complex, so we advise that you contact dns accountants today.

You need to consider the following things:

• Total property income you’ve received.
• Allowable expenses you can deduct against that income (this will reduce the tax you owe).
• Work out the tax you owe to HMRC (this can be very complex as tax rates change over the years and you’ll need to consider personal allowance and relevant income tax rates).

HMRC charges penalties on any additional tax you owe if you:

• sent them an incorrect tax return
• did not tell them that you’re liable to tax

HMRC does not charge interest on these penalties unless you pay them late.

Even if you’ve made rental losses from your rental income, you need to declare losses as well. Rental losses from previous tax years can often be carried forward to reduce your tax liability in future years.

What happens if I don’t have accurate records?

If you don’t have complete records, you will need to estimate your figures for the disclosure. HMRC may ask for an explanation of your estimates, so be prepared.

Look for past:

• bank statements
• receipts
• invoices.

Note that future failure to keep appropriate records, can result in penalties up to £3,000, so keep accurate records from now on.

What is the end date for the Let Property Campaign?

Unlike some other HMRC campaigns, there is no disclosure ‘window’ or ‘cut off’ date currently that requires you to disclose what you owe by a specific date. However, we would advise that you do this as soon as possible in case these rules change and the window is closed by HMRC.

When do I have pay the tax that I owe?

Once you have notified HMRC under the Let Property Campaign, you want to take part and made a formal offer, you will have 90 days to calculate and pay what you owe.

If you cannot afford to pay within this time period, depending on your circumstances, you may be able to spread your payments by negotiating a time to pay arrangement with HMRC

What if HMRC disagrees with the disclosed information?

If HMRC decide to accept your disclosure, they will send you a letter accepting your offer.

If HMRC find that your disclosure is materially incorrect, they will reject your disclosure and look to charge significantly higher penalties to you, so getting it right is crucial.

Non-disclosure penalties on Let Property Campaign

If you fail to notify HMRC of the tax you owe within the agreed deadlines, then HMRC will charge penalties for failure to notify.

If you’ve filed a self-assessment tax return but you didn’t report property income on the tax return, then a penalty for inaccurate returns will be charged. If you didn’t file a self-assessment tax return at all, then a different penalty will apply.

The calculation for penalties can be complex, so contact dns accountants today.

How dns accountants can help you to declare your rental income through the Let Property Campaign

The Let Property Campaign is aimed at landlords who have failed to declare income from renting out property as well as individuals who have incorrectly filled out their tax returns. Like other HMRC campaigns, you will reduce the penalty they have to pay if disclose unpaid taxes or undisclosed rental income voluntarily. If you don’t declare all your letting income or any tax you may have underpaid and are caught by HMRC, you could be liable for up to a 100% penalty on the tax owed.

Here at dns accountants, we have significant experience dealing with voluntary tax disclosures and tax investigations. We will work with you to:

• Conduct a background check on your case and identify any issues that require disclosure.
• Advise on the most appropriate steps to take to make a full disclosure to HMRC and minimise the possibility of follow-up questions or additional penalties from HMRC.
• Calculate the unpaid tax by taking into account allowable expenses and tax relief/allowances.
• Deal with HMRC on your behalf, removing the need for you to speak with HMRC directly.
• Advise you on the likely penalty position and evaluate all mitigating factors to help reduce your penalties as much as we can.

For more help and advice on the Let Property Campaign, how to make a disclosure registering for self assessment and submitting tax returns, Contact dns accountants on 03330886686 or you can also e-mail us at enquiry@dnsaccountants.co.uk.

About the author

Siddharth Agarwal
I am a Chartered Tax Advisor (OMB) and ACCA. I have 9+ years of experience in owner-managed business taxation issues, company reorganisations, property taxation, and succession planning. I also work with private clients on bespoke tax planning strategies for trusts, residence status, and non-residents. I aim to fulfil my professional duties towards my clients and keep them satisfied, my utmost priority. I believe in establishing and maintaining businesses and personal relationships as the key to mutual growth.