Let Property Campaign (LPC) is a vital campaign by HMRC to help landlords in the UK disclose undeclared rental income voluntarily. As HMRC becomes ever more stringent in its approach to tax compliance, this is a golden opportunity to put things right and avoid hefty penalties.
Whether you’re a single property landlord or have several rentals, you can’t afford to miss out on the benefits that LPC offers. This blog provides clear, actionable guidance on what the campaign is, who can participate, and how to do so effectively. Protecting your finances isn’t just about compliance. It’s about your peace of mind.
What is the Let Property Campaign?
HMRC’s Let Property Campaign is a disclosure scheme for residential landlords to report unpaid tax on rental income. It aims to attract people with undeclared income from UK or overseas properties, who can make full or partial disclosures with reduced penalties.
Its objectives are straightforward:
- Help in promoting voluntary tax compliance.
- To reduce instances of tax evasion in the property sector.
- Give a simplified and penalty less route for the landlords to regularize their tax affairs.
Landlords who join the campaign can avoid the potential consequences of an HMRC initiated investigation which could result in higher fines or legal action.
Who Can Benefit from the Let Property Campaign?
The LPC is aimed at a wide group of landlords who may have unintentionally or intentionally missed out on declaring rental income. These include:
- Single-property landlords
- Multi-property landlords
- Property owners who are renting their property because they have moved or for some other reason.
- UK landlords who are earning money from rentals abroad but don’t report it.
- You are receiving rental income from renting out a room in your main residence and rental income is above rent a room scheme threshold.
In common scenarios, rental income is often not reported, such as when you receive cash payments, misunderstand tax rules, or have loss from rental properties. LPC is a chance to correct your tax records with no significant consequences if any of these apply to you.
Why Take Part in the Let Property Campaign?
Engaging with the Let Property Campaign offers numerous advantages for landlords:
- Reduced penalties: Voluntary disclosure with HMRC is rewarded with significantly lower fines than during investigations.
- Avoidance of investigations: Compliance is signaled by a proactive approach, which may avoid HMRC scrutiny.
- Peace of mind: Once you have made disclosures, you can run your rental business without the fear of retrospective tax issues.
The risks of non-compliance are considerable:
- Hefty fines: Non disclosure can lead to penalties as high as 100% of unpaid tax, dependent on the seriousness of the non disclosure.
- Legal implications: Legal action or criminal charges may result if persistent non compliance is encountered.
- Reputational damage: Being publically listed as a tax defaulter is bad for your image.
Being part of the LPC means that you’re on the right side of the law and protecting your finances and reputation.
Making a Disclosure under the Let Property Campaign
When you inform HMRC that you intend to disclose unpaid taxes, preparation is very important. Here’s what you need to consider:
Collect all relevant documents which are in relation with your rental properties. This includes:
- Rental agreements.
- Expenses (e.g., repairs, agent fees) Invoices.
- Rental income bank statements.
- Mortgages interest payments (if any).
- Property management statements (if applicable)
A detailed record gives accurate calculations and minimises the chance of discrepancies.
If you are going to disclose unpaid taxes, use the Digital Disclosure Service (DDS). This step secures your place in the campaign, and gives you a disclosure reference number. From this point, you have 90 days to finish the disclosure.
Disclosure is the process of working out how much tax you owe, including penalties and interest, and sending it to HMRC. Below are the critical components:
Calculate your rental income over the years. Deduct allowable expenses such as:
- Costs of repairs and maintenance.
- Property management fees.
- Certain legal fees.
- Council tax (if paid by the landlord).
Make sure your calculations are correct so as to avoid problems. HMRC assumes that you will declare your taxable income and allowable deductions.
It is essential to understand penalties. Factors influencing the penalty include:
- The grounds of non disclosure (error or deliberate omission).
- The period of non-compliance.
- How much do you cooperate with HMRC.
Unintentional errors normally result in penalties that range from 0% to 30% and deliberate action could lead to up to 100%. It means calculating interest on the overdue tax to compensate for the delay.
The declaration is a straight forward confirmation that what you’ve disclosed is accurate and complete. Provide all the information you have given with your financial records.
HMRC will look at your disclosure once it has been submitted. Once you’ve paid the calculated tax (and any applicable penalties), You will receive a letter from HMRC confirming whether they have accepted your disclosure or not or if they need any further information regarding the calculation.
Your disclosure should be accompanied by payments at the same time. Just use the payment reference number that is given during the notification stage of the order. Unless alternative arrangements are made, make sure HMRC gets the payment within the 90 day deadline.
HMRC supports various payment methods:
- Bank transfers.
- Online card payments.
- Direct Debit.
Electronic payments are faster, safer, and they are trackable.
When You Can’t Pay the Entire Amount
If you can’t pay in full, call the Let Property Campaign Helpline before you submit your disclosure. You’ll need to:
- Enter your disclosure reference number.
- Describe your financial situation — such as income, assets, and debts.
- Talk to HMRC about payment options.
After HMRC Receives Your Disclosure
Acknowledegment and Review
HMRC will acknowledge your disclosure when submitted. HMRC may accept your disclosure or can request further documents to support your calculation. You have to be ready to prove your calculations.
Disclosures may be rejected if:
- Incomplete or materially incorrect.
- Serious organised crime or deliberate fraud (e.g., VAT fraud).
- Prior to disclosure, an HMRC investigation was carried out.
Higher Penalties for Incorrect Disclosures
If you have discrepancies in your disclosure, expect significantly higher penalties. Deliberate defaulters may be subject to criminal investigations or being included on HMRC’s public list of deliberate defaulters.
Avoiding Common Mistakes When Disclosing
Disclosure is often the point where landlords err. Avoid these pitfalls:
- Incomplete disclosures: It can lead to rejection or even further penalties if all rental income is not included or properties are not included.
- Misreporting expenses: Non allowable expenses are declared or eligible deductions not claimed can skew the calculation.
- Missing deadlines: Higher fines and investigations can be triggered if disclosures or payments aren’t submitted within 90 days.
With professional advice from a property accountant and a lot of meticulous record-keeping, you can avoid these issues and clear out the process smoothly.
How Accountancy Firm can help
The Let Property Campaign can be complicated, but a good accountancy firm makes the process easier and keeps you compliant. Here’s how they help:
- Accurate income calculations: Your financial records are evaluated by a property accountant who then determines total rental income and tax liability.
- Identifying allowable expenses: Accountants for landlords make sure you claim every single eligible deduction that can reduce your taxable income.
- Liaising with HMRC: They deal with correspondence with HMRC, make sure that disclosure is made and if required, negotiate payment terms.
- Minimizing penalties: Accountants for landlords have expertise in tax regulations and will help you to minimize penalties.
By partnering with a trusted firm, you save time, lower stress, and are confident about your tax affairs.
Let Property Campaign FAQs
- If you miss the disclosure deadline, what happens?
The 90-day deadline can be missed and may result in higher penalties or investigations. If you can’t repay or make full disclosure and need extra time, contact HMRC immediately to discuss your options.
- Can you disclose income from overseas properties?
Yes, rental properties overseas are subject to disclosure under the campaign.
- If I realise a mistake after submission, what will happen?
If you find an error in your disclosure, you should contact HMRC immediately to correct your submission. Penalties are reduced by prompt corrections.
- If I have already been contacted by HMRC?
If HMRC has already started an investigation you cannot use the LPC. Instead, get professional advice on the issue.
- How far can HMRC go back?
Depending on the nature of the non compliance, HMRC can generally investigate up to 20 years.
- What penalties am I facing?
Penalties depend on the reason for non-disclosure:
- Unintentional errors 0-30%.
- For deliberate omissions, up to 100%.
- Is overseas rental income required to be disclosed?
Yes, income from overseas properties must be declared and LPC will accept this in your disclosure.
Conclusion
The Let Property Campaign is a great opportunity for UK landlords to regularize their tax affairs, avoid huge penalties and peace of mind. The longer you delay, the more risks it adds, so start proactively complying today.
If you’re unsure where to start or need some help in navigating the LPC, then contact us today. Our expert accountants for landlords make sure that your disclosures are accurate and that you won’t be penalized. Start now and take the first step toward financial clarity and compliance!