A Complete Guide to Let Property Campaign

The Let Property Campaign (LPC), introduced in 2013, is a disclosure initiative of HMRC aimed at encouraging landlords who own and rent out residential properties to come forward and disclose any rental income they may have previously undeclared to the tax authorities. 

This guide is intended for individuals who have received a "nudge" letter from HMRC requesting disclosure of their property income, or those who are voluntarily choosing to report their property income to HMRC. It provides comprehensive coverage of all aspects of the Let Property Campaign, including eligibility, the disclosure process, and potential penalties. 

Undisclosed Rental Income : A Sample Letter from HMRC

If you are a landlord of residential property and have not yet disclosed your income from letting property to HMRC, you may receive a letter similar to the one shown below.

If you've received a similar nudge letter from HMRC and are unsure what to do, Check our article on HMRC Investigations and Nudge Letters: Understanding and Managing Tax Enquiries or contact us.

Eligibility for Let Property Campaign

The Let Property Campaign has a wider range of coverage for landlords who can take advantage of its benefits. Nonetheless, there are some exceptions to keep in mind.

 Any landlord who has undeclared income related to residential property can apply for the Let Property Campaign. This includes landlords:

Exceptions

Let Property Campaign cannot be applied by:

• • landlords renting out non-residential properties like shops, garages, lockups etc.

• • landlords who are representing a trust or company and want to report their income.

Applying for Let Property Campaign

If you are a landlord who owns and rents out residential property and you wish to participate in the Let Property Campaign, you can follow these steps to apply:

Notify

At this stage, you are not required to provide any details about the undisclosed income or the amount of tax you owe. After receiving your notification, HMRC will issue you a unique Disclosure Reference Number (DRN), which you will need to use when communicating with them about the Let Property Campaign.

Let Property Campaign Application Information

To notify HMRC under the Let Property Campaign, you will need to provide the following information.

Individual Information

• • Name, Address and Date of Birth

• • Email Address

• • Telephone Number

• • Unique Taxpayer Reference Number

• • National Insurance Number

• • Primary Occupation

• • VAT Registration Number

Property Information

• • No. of Properties that you own

• • Address of the Properties

• • Purchase Price and Date of Acquisition

• • Ownership

• • Owner name, Address & Telephone number

• • Details of Letting Agency

• • Reasons why rental income was not declared to HMRC

Sample Letter from HMRC Upon Notification for LPC

After you have notified HMRC of your intent to participate in the Let Property Campaign, you will be sent a letter that resembles the example below.

Note: You can make the disclosure of your rental income as soon as you receive your unique Disclosure Reference Number (DRN).

However, it must be done within 90 days of receiving the notification acknowledgement.

Making Let Property Campaign Disclosure

The process of preparing a disclosure involves several steps and requires you to gather various pieces of information related to your rental income and expenses.

The steps involved in preparing a disclosure under the Let Property Campaign are explained as follows:

Calculate the Tax Owed

In order to arrive at your taxable profit and the amount of tax due on your rental income, you must first subtract any allowable expenses that were incurred while generating that income.

The rates of Income tax you’ll pay depend on how much income you earn above your Personal Allowance, which is an annual amount of tax-free income

Make a Formal Disclosure

Sample Acceptance Letter from HMRC for LPC

Here is a sample of an acceptance letter from HMRC for a disclosure submitted on behalf of one of our clients:

Payment

You must make a payment to HMRC no later than the 90 days specified on your notification acknowledgement letter unless you’ve contacted HMRC to request an extension on the payment deadline.

You must use your Payment Reference Number (PRN) provided by HMRC to pay the sum that has been offered when submitting your disclosure.

In cases where you can't pay the full amount, you need to inform HMRC as soon as possible before sending in your disclosure by contacting the ‘Let Property Campaign Helpline’.

Let Property Campaign Penalties 

When determining penalties, HMRC considers the behaviour that led to the understatement, whether you voluntarily came forward, and the quality of your disclosure.

The penalties are calculated as a percentage of the potential lost revenue which is additional tax amount payable by the landlord after taking into consideration of undisclosed property income.

The penalty can be reduced based on the quality of disclosure under the Let Property Campaign. The penalty reduction is applied on the difference between the maximum & minimum penalty rate of the range it falls.

 The penalty reduction is based on how you respond to the questions from HMRC (telling), helping with their assessment (helping) and giving access to records and documents wherever required (giving access to records).

30%

Telling

40%

Helping

30%

Giving Access to Records

Non Discloure Penalties for the Let Property Campaign can take two forms.

Penalties for Failure to Notify

If an individual fails to notify HMRC of their tax liability within the appropriate deadline, they may face a penalty for failure to notify. This could happen to someone who only had employment income subject to PAYE tax and didn't previously file a self-assessment tax return. In this case, penalties for failure to notify is levied.

For example, 

Upon investigation, HMRC found that John owns a property in the UK but did not disclose his income related to it. He was aware of the requirement to disclose his income but had no intention to conceal it.

This case was classified as Prompted and Deliberate Failure to Notify. The penalty range is therefore 35% to 70%. Moreover, he received a reduction in the quality of disclosure (i.e., telling and helping) of 40%.

The total penalty to be paid by Mr. John is £4,134.

Penalties for Inaccurate Returns

If an individual has already filed their tax return but failed to report their property income, they may face a penalty for inaccurate returns. The penalty rate for filing incomplete or incorrect self-assessment returns is different from the penalty rate for not filing them at all

For example, 

Hailey realized after submitting her self-assessment tax return that she had failed to disclose her property income from a property she owns to HM Revenue & Customs (HMRC). She chose to voluntarily report her income to HMRC.

This case was classified as Unprompted and Careless Inaccuracy. The penalty range is therefore 0% to 30%. Moreover, she received a reduction in the quality of disclosure (i.e., telling, helping, and giving) of 70%.

The total penalty to be paid by Hailey is £5,388. 

Case Video

Our team takes pride in the successful resolution of diverse tax cases, providing clients with top-notch advice and solutions. 

Watch the video below to learn about how we've resolved Let Property Campaign case for one of our client.