HM Revenue & Customs recovered £104 million from voluntary landlord tax disclosures in 2025/26 as the number of cases reached its highest level for seven years.
The total marked the third consecutive year in which HMRC generated more than £100 million from landlord disclosures, according to figures obtained through a freedom of information request by Price Bailey, the chartered accountant.
Landlords made 11,511 voluntary disclosures during the year, the highest number since 2018/19. However, the average amount recovered per disclosure fell to £9,063 from a record £13,713 in the previous year.
The figures include tax recovered through voluntary disclosures under the Let Property Campaign, as well as compliance work such as non-responder cases and discovery assessments.
About 2.4 million private landlords operate in the UK, according to the Ministry of Housing, Communities & Local Government. The 111,843 disclosures made under the campaign to date represent just under 5% of that number.
The Let Property Campaign has generated £674 million since it was launched in 2013/14.
Price Bailey said HMRC was making greater use of Land Registry records to identify people who owned several residential properties and might have failed to declare rental income.
Andrew Park, tax investigations partner at Price Bailey, said: “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.”
He said: “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.”
Park 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 Since mortgage interest relief was withdrawn, taxable profit can appear even when there is little or no real-world profit.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.”
TAX RULES ADD TO COMPLIANCE BURDEN
Price Bailey said landlords continued to be caught out by the distinction between capital and revenue expenditure. Replacing a kitchen on a like-for-like basis may be tax-deductible, while installing a substantially upgraded kitchen is not.
Making Tax Digital for Income Tax requires quarterly submissions from April 2026 when combined gross property and self-employment income exceeds £50,000. The threshold is due to fall in stages to £20,000 from April 6, 2028.
The annual capital gains tax exemption has been reduced to £3,000, while higher capital gains tax rates apply to disposals made after October 2024.
Many landlords have incorporated their businesses to preserve mortgage interest deductibility. However, corporation tax rates of between 19% and 25% have made decisions about extracting profits more complicated.
Park said: “Reduced allowances, more frequent reporting and increasingly complex rules mean landlords should review their tax affairs carefully. Even unintentional omissions can lead to significant liabilities as HMRC’s compliance activity intensifies.”
