The WhatsApp groups lit up first. Screenshots of HMRC letters, beige and blunt, passed from landlord to landlord with the kind of captions usually reserved for parking fines and school emails: “Anyone else had this?”
Accountants say the calls follow a pattern. A client rings, letter in hand, voice a little too bright. “It says they think I may have rental income I’ve not told them about. It’s just a generic letter… right?” Then there’s a pause, and you can almost hear them replaying the last few tax years in their head.
Something has shifted in how HMRC talks to landlords. The new “nudge letters” are short, unsettling, and backed by far more data than many people realise.
They are not, in themselves, tax assessments. But they are a warning shot. And the most useful work happens before one ever lands on your doormat.
What the new HMRC landlord “nudge letter” actually is
HMRC’s nudge letters are standardised letters sent where their systems suggest there might be undeclared or under-declared income. They don’t accuse you outright; they “invite” you to check your returns and put things right.
The latest wave targets people who:
- appear to own one or more properties, but
- have not declared rental income, or
- have sold property without reporting capital gains, or
- seem to run short-term lettings (for example via online platforms) with no matching entries on their tax returns.
The wording is deliberately calm but pointed. It typically explains that HMRC has information from “third parties” and that you should review your position. It may point you towards the Digital Disclosure Service or the Let Property Campaign.
What it really says between the lines is this: We already have a fair idea you are a landlord. We are giving you the chance to fix any problems on your own terms.
Ignore that invitation and the tone can change quickly.
How HMRC already knows you are a landlord
For years, many landlords assumed their activities were too small, too local, or too informal to attract attention. The data now tells a different story.
HMRC can match your details from:
- Land Registry and Registers of Scotland – showing when you bought or sold residential property.
- Lender and mortgage data – buy-to-let mortgages, additional borrowing, and interest claimed on tax returns.
- Letting agents and online platforms – agents must report landlord details; major platforms share income data.
- Deposit protection schemes – tenancies registered under your name or company.
- Council tax and licensing records – HMOs, selective licensing areas, and council tax exemptions.
- Overseas data-sharing agreements – where foreign tax authorities flag UK-resident owners of overseas property.
When this data does not line up with your Self Assessment or company returns, you move from “anonymous” to “of interest” very quickly.
Accountants say the biggest surprises often come from casual or historic arrangements: a flat rented to a relative for “a bit of help with the mortgage”, a few years of Airbnb income, or that former home you never quite stopped letting out after moving.
Why this particular letter has landlords rattled
The latest letters feel different for three reasons:
- They are highly targeted. This is not a random campaign. If you receive one, it is because something specific in HMRC’s data profile does not add up.
- They frame non-compliance as your choice. The letter suggests that if you choose not to check and correct, HMRC may assume your position is deliberate if issues later appear.
- They hint at higher penalties. By writing now, HMRC strengthens its argument for tougher penalties later, especially where behaviour is classed as “careless” or “deliberate”.
For landlords who genuinely believed they were “too small to matter”, this feels like the moment the rules changed. In reality, the rules have been there for years. It is HMRC’s ability to enforce them that has caught up.
The quiet work to do before a nudge letter arrives
Accountants are clear on one point: the cheapest, least stressful time to correct anything is before you receive a letter.
A practical pre-emptive checklist looks like this:
Gather your paper trail
- Tenancy agreements and letting agent statements
- Mortgage statements and loan details
- Bank statements for accounts used for rent and expenses
- Invoices for repairs, insurance, and service charges
- Tenancy agreements and letting agent statements
Rebuild your rental picture, year by year
- What properties have you let since 2016/17?
- When were they empty, and when were they occupied?
- What rent actually reached your account, not just what was agreed?
- What properties have you let since 2016/17?
Compare with what you reported
- Cross-check against every Self Assessment or company return.
- Make sure all rental income appears, including:
- lodgers and room rentals
- short-term holiday lets
- overseas property income
- Confirm that any property sales were considered for Capital Gains Tax (CGT), including the 60-day reporting where required.
- Cross-check against every Self Assessment or company return.
If you spot gaps or mistakes, speak to an accountant before you contact HMRC. A calm, ordered disclosure almost always looks better than a panicked email sent at midnight.
“We tell clients to assume HMRC has a high-level map of their property history,” says one tax adviser. “Our job is to make sure the numbers on the tax return tell the same story – or fix it quickly if they don’t.”
The common problem areas accountants keep seeing
Three themes come up again and again in landlord disclosures.
1. Old assumptions, new rules
Many people started renting property years ago, under different rules:
- 10% wear-and-tear allowance on furnished lets (abolished in 2016/17).
- Full tax relief on mortgage interest for individuals (phased out and replaced by a basic rate credit).
- No 30/60‑day CGT reports on UK residential property sales.
If your approach never changed, you may now have:
- over-claimed interest relief as an individual landlord
- calculated profits using allowances that no longer exist
- missed CGT reporting deadlines, even if you did eventually show the gain on your Self Assessment.
2. “It’s only a few weekends of Airbnb”
Short-term letting has its own traps:
- Mixing personal and guest stays in one property.
- Not realising when you cross from “rent-a-room” into fully taxable trading or property income.
- Forgetting that platform income is now routinely reported to tax authorities.
The amounts involved can look small, but over several years they add up – and HMRC’s data history is getting longer.
3. Former homes and “accidental landlords”
A flat kept on after moving, a house let out during an overseas secondment, a parent’s property rented to pay for care – the stories vary, but the tax issues are familiar:
- Failing to declare rental income at all.
- Assuming a property is fully covered by Private Residence Relief on sale when part of its life was a let period.
- Overlooking that reliefs have changed and lettings relief is now much narrower.
None of these situations are unusual. The risk lies in leaving them half-documented and half-remembered until a brown envelope forces the issue.
A simple action plan if you have not received a letter yet
Think of this as your “pre‑nudge MOT”.
- List every property you have owned in the last 10 years and what it was used for each year.
- Tie every pound of rent you received to a month and a property, as far back as you reasonably can.
Check the basics:
- Have you registered for Self Assessment if required?
- Are all rental and property pages completed correctly?
- Have you kept records for at least 5 years after each filing deadline?
- Have you registered for Self Assessment if required?
Review the tricky bits with professional help:
- Mortgage interest restrictions for individuals.
- What counts as a repair vs an improvement.
- CGT on property disposals and reporting deadlines.
- Overseas properties and exchange rates.
- Mortgage interest restrictions for individuals.
If you uncover mistakes covering earlier years, an accountant can guide you through a voluntary disclosure. That usually means:
- lower penalties
- interest calculated on a clearer timetable
- less chance of HMRC opening a wider enquiry into your affairs.
What to do if a nudge letter lands on your mat
A calm response matters more than a quick one.
- Do not ignore it. Silence is the easiest way to turn a nudge into a formal enquiry.
- Note the deadline. HMRC usually gives a window to respond or to make a disclosure.
- Read the letter carefully.
- Is it about rental income, a property sale, or both?
- Does it refer you to a specific disclosure route (for example, the Let Property Campaign)?
- Is it about rental income, a property sale, or both?
Get advice before replying.
- Show your accountant the letter and your records.
- Agree whether:
- you are already compliant, and a short confirmation letter is appropriate, or
- you need to make a full disclosure covering multiple years.
- you are already compliant, and a short confirmation letter is appropriate, or
- Show your accountant the letter and your records.
If you are compliant, evidence it.
- Your reply should be polite, factual, and supported by a brief schedule if useful.
- Keep a copy of your response and proof of posting or submission.
- Your reply should be polite, factual, and supported by a brief schedule if useful.
Let’s be honest: it is tempting to send a quick “Everything is correct” email and move on. But if HMRC later proves otherwise, that earlier assurance can weigh heavily when penalties are set.
Where accountants focus first when a landlord is worried
Accountants tend to triage landlord cases along three lines:
| Area | What HMRC may look at | What you should check |
|---|---|---|
| Rental income | Gaps between known properties and declared rents | Bank statements, agent summaries, informal lets |
| Property sales | Land Registry data vs CGT reports | Completion dates, residence periods, valuations |
| Pattern of behaviour | One-off error vs repeated under-reporting | Consistency of records, advice taken, corrections made |
From there, they decide whether to:
- make a one-year correction, where an isolated mistake has been made
- disclose multiple years, where a pattern exists
- or defend the existing position, where records clearly support the returns already filed.
The big message from professionals is that HMRC is often less interested in perfection than in honesty and cooperation backed by evidence.
How to stay on HMRC’s good side from now on
A few habits make future letters far less likely – and far less frightening if they do arrive.
Separate your finances.
- Use a dedicated bank account for each rental business (and ideally for each property company).
- Keep all property income and expenses flowing through that account.
- Use a dedicated bank account for each rental business (and ideally for each property company).
Document decisions, not just numbers.
- Note why you treated a spend as repair vs improvement.
- Record when a property was genuinely your main home.
- Note why you treated a spend as repair vs improvement.
Align with upcoming changes.
- Making Tax Digital for Income Tax will push more landlords towards digital record-keeping and quarterly updates.
- Moving now to software or structured spreadsheets softens that landing and impresses HMRC if questions arise.
- Making Tax Digital for Income Tax will push more landlords towards digital record-keeping and quarterly updates.
Book an annual “property review” with your accountant.
- One meeting a year to walk through rents, voids, repairs, and any sales.
- Cheaper than a dispute, and far kinder on the nerves.
- One meeting a year to walk through rents, voids, repairs, and any sales.
“Once clients see their whole property story on a single page – income, gains, reliefs – the fear tends to fade,” says another adviser. “The unknown is always scarier than the bill.”
FAQ:
- Is a nudge letter the same as a tax investigation?
No. A nudge letter is an early warning asking you to check your position. A formal enquiry has specific legal powers attached. But handling a nudge badly can increase the chances of a full investigation later.- Do I have to reply if I am sure everything is correct?
You should normally respond, even if briefly, confirming you have reviewed your affairs and believe your returns are complete and accurate. Get an adviser to check your records before you do.- How many years back can HMRC go for rental income?
Up to 4 years for genuine mistakes, 6 years for careless errors, and up to 20 years where behaviour is considered deliberate. The earlier you correct, the better your position on penalties.- Can I still use the Let Property Campaign?
Yes, in many cases. It remains a common route for individuals to disclose previously undeclared rental income, often with reduced penalties. Your adviser can confirm if it is suitable for your circumstances.- What if I cannot pay all the tax at once?
HMRC will usually consider a Time to Pay arrangement if you engage early and honestly. An accountant can help you propose a realistic plan based on your rental income and other commitments.
The new HMRC nudge letters are a sign of sharper data and a firmer tone, not a sudden change in the law. For landlords, the real power still lies in quiet preparation: clear records, honest reviews, and timely corrections.
The letter you never receive is the easiest one to deal with.
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