HMRC's Landlord Nudge Letters Recovered £104m Last Year — Are You on the List?

A record year for HMRC's landlord crackdown

HMRC recovered £104.3 million from landlords in 2025/26 through its ongoing "nudge letter" campaign — the third year running the total has topped £100 million. There were 11,511 voluntary disclosures, the highest number since 2018/19, though the average payment fell to £9,063, down from £13,713 the year before. Since the Let Property Campaign launched in 2013/14, HMRC has now recovered £674 million in total from landlords who under-declared rental income.

How HMRC is finding undeclared rental income

• HMRC cross-matches Land Registry records against Self Assessment returns to identify people who own multiple residential properties

• "One-to-many" nudge letters go out to suspected under-reporters, often before any formal investigation is opened

• Restrictions on mortgage interest relief have created "phantom profit" traps, where landlords with high finance costs under-report because their cash position doesn't match their taxable profit

• Landlords and sole traders with combined gross income over £50,000 are now inside Making Tax Digital for Income Tax, filing quarterly digital updates rather than one annual return — the threshold drops to £30,000 from April 2027 and £20,000 from April 2028, pulling in far more landlords

Tax investigations partner Andrew Park of Price Bailey put it bluntly: "HMRC's data-matching capability has become relentless. Most voluntary disclosures are now prompted by HMRC nudge letters."

What a nudge letter means (and doesn't mean)

Receiving a nudge letter is not the same as being under formal investigation, and it doesn't necessarily mean HMRC has firm evidence against you specifically — the letters often go out based on data patterns rather than confirmed discrepancies. But ignoring one is a mistake: if HMRC opens a formal enquiry later and finds unreported income, penalties and interest are typically far higher than if you had disclosed voluntarily first.

What landlords should do now

• Compare what you've actually declared against your mortgage statements, letting agent records and Land Registry-held ownership details

• Consider making a Let Property Campaign disclosure proactively, rather than waiting for a letter to arrive

• If your rental and other income already exceeds £50,000, check your Making Tax Digital software is ready for quarterly digital record-keeping

• Keep clear records of allowable expenses, particularly given the ongoing restrictions on mortgage interest relief

FAQ

I've received a nudge letter from HMRC — do I need to panic?

No, but you do need to act. Read it carefully, check whether it applies to you, and get advice before responding. A calm, accurate disclosure is treated far more favourably than no response at all.

What is the Let Property Campaign?

It's HMRC's long-running voluntary disclosure route for landlords who haven't declared rental income correctly. Coming forward under the campaign generally means lower penalties than if HMRC discovers the income itself.

Will penalties be lower if I come forward voluntarily?

Usually yes. HMRC's penalty regime rewards "unprompted" disclosures with lower percentage penalties than cases where HMRC has to chase the taxpayer first.

Does this only affect landlords with multiple properties?

No. While Land Registry data-matching makes it easier to find multi-property owners, HMRC's nudge letters have also gone to landlords with a single let property, particularly where rental income doesn't appear on a Self Assessment return at all.

If you've had a nudge letter, think you may have under-declared rental income, or just want your property tax position checked over before HMRC gets in touch, Jackson Lee Accountants can help you review your position and, if needed, make a disclosure on the right terms. Get in touch (https://www.jacksonleeaccountants.co.uk/contact-me).

Sources: HMRC recovers £104m from landlord tax 'nudge letters' – Property118 (https://www.property118.com/hmrc-recovers-104m-from-landlord-tax-nudge-letters/), Let Property Campaign: your guide to making a disclosure – GOV.UK (https://www.gov.uk/government/publications/hmrc-your-guide-to-making-a-disclosure/your-guide-to-making-a-disclosure)