What are the property income and gains rules?
If your gross rental income exceeds £1,000 in a tax year, you must notify HMRC. You may be able to deduct allowable expenses - including letting agent fees, maintenance costs, insurance, and mortgage interest (subject to current rules) - before calculating your taxable profit.
If a second property is sold, any gain (the increase in value between purchase price and sale price) will usually be subject to
Capital Gains Tax. There are specific reporting deadlines for UK property sales, and failure to report on time carries its own
penalties.
Why have I received a letter from HMRC about my property?
HMRC receives details of property purchases, sales, and rental payment data from multiple sources - including estate agents, letting platforms, the Land Registry, and overseas tax authorities. It cross-references this data against individuals' tax returns.
Where income or gains appear undeclared, HMRC writes to the taxpayer.
These letters may refer to "your property income", "rental payments", or "overseas assets, income or gains." They will not usually describe themselves as a "nudge letter" - do not wait for that phrase to appear before acting.
In some cases, HMRC will use the data to open a formal Enquiry or Criminal Investigation rather than inviting a disclosure. If this has happened, you will not be offered the Let Property Campaign route and should take specialist advice immediately.
What should I do if I receive a letter from HMRC about my property?
Do not ignore the letter and do not respond before taking specialist advice. Both carry risks.
Ignoring the letter risks a formal enquiry opening, with higher penalties. Responding without advice risks overdisclosing, claiming the wrong expenses, or misrepresenting your behaviour - all of which can increase your exposure.
Contact a specialist such as inTAX before making any contact with HMRC. We assess your position and advise on the best route forward.
What is the Let Property Campaign process?
The process has two key steps. First, you (or your adviser) notify HMRC that you intend to use the Let Property Campaign. Thisgives you 90 days to calculate the tax owed and make payment. Second, you submit the full disclosure within that 90-day window.
HMRC expects you to calculate the tax due yourself - which means correctly identifying all allowable expenses and accuratelyrepresenting your behaviour over the relevant period. An incorrect calculation in either direction can have significantconsequences. Expert advice ensures you pay what you genuinely owe.
Will I pay a penalty as well as tax?
Whether a penalty applies - and how large it is - depends on whether or not a tax return has been filed, your behaviour and how promptly you come forward. The table below gives indicative ranges for inaccurate returns.
| Behaviour |
How far back HMRC can go |
Penalty range |
| Reasonable care |
4 years |
No penalty |
| Careless error |
6 years |
0% – 30% of tax owed |
| Deliberate error |
20 years |
20% – 70% (unprompted); up to 100% (prompted) |
That 20-year window also means 20 years of waiting for a letter that may never come - but might. Many of our clients tell us that resolving the position, even where tax is owed, is a relief. The anxiety ends the day the disclosure is made. Professional advice ensures you pay what is genuinely due - no more, no less.
How your behaviour is characterised - and how well the disclosure is presented - makes a material difference to the penaltyoutcome. Specialist advice is strongly recommended in all but the most straightforward cases.
Can I just contact HMRC myself?
You can - but it carries real risks. Taxpayers who contact HMRC before clarifying their position can make themselves unnecessarily vulnerable. Common errors include disclosing income from more years than required - or not enough, failing to claim all allowable expenses, and misrepresenting the penalty position.
HMRC is experienced at challenging incomplete or inaccurate disclosures. A specialist knows what to say, what not to say, and how to present your case in the most favourable light. In our experience, professional advice pays for itself in the outcome achieved.
How much does it cost to use inTAX?
We discuss fees transparently after a free initial consultation, once we understand the scope of your position. There are no up front costs and no obligation following the consultation. We will give you a clear picture of our fees before any work begins.
What happens if I do nothing?
If you ignore an HMRC letter, the matter does not go away. HMRC may open a formal enquiry, at which point penalties increase. In serious cases, HMRC can open a criminal investigation. The 20-year enquiry window for deliberate errors means unresolved matters can resurface long after the fact. Early action is always better than waiting.
