Tax 27th February 2025
Let Property Campaign: Compliance, Disclosure and Penalty Calculations
Understanding the Let Property Campaign (LPC)
The Let Property Campaign (LPC) is an HMRC initiative designed to help landlords disclose unpaid taxes on rental income. Whether you rent out a single property, multiple properties, a holiday home, or even a room that exceeds the Rent a Room Scheme threshold, you must declare any undisclosed income.
Failure to disclose could result in higher penalties or even criminal prosecution if HMRC later identifies unpaid taxes. Once notified, landlords have 90 days to calculate and settle their tax liabilities under the campaign’s favorable terms.
Who should use the LPC?
The LPC is available for individual landlords with undisclosed rental income from:
- UK or overseas residential properties
- Holiday lets
- Inherited rental properties
- Properties let while living abroad (even temporarily)
However, the LPC does not apply to non-residential property (e.g., garages, shops) or rental income managed by a company or trust.
If unsure, HMRC provides an online questionnaire to determine whether you need to disclose unpaid tax.
How to disclose rental income to HMRC
Step 1: Notify HMRC
Inform HMRC of your intention to make a disclosure. You do not need to provide income details at this stage. Each person must make a separate disclosure (e.g., if a property is jointly owned).
After notification, HMRC will issue a Disclosure Reference Number (DRN) and a Payment Reference Number (PRN) for making payments.
Step 2: Submit Your Full Disclosure
You must submit your full disclosure and pay the tax due within 90 days of notification. This includes:
- Total rental income for each affected tax year
- Deductible allowable expenses
- Tax liability calculations
HMRC expects full payment upon submission, but if you cannot pay in full, you must contact them to arrange a payment plan.
LPC Penalty Calculations: How HMRC assesses non-compliance
Types of penalties
Penalties depend on the cause and timing of the non-disclosure:
-
- Failure to notify – Not informing HMRC about taxable rental income.
- Inaccurate returns – Reporting incorrect or incomplete rental income in a tax return.
LPC penalty reductions
Penalties may be reduced based on the quality of disclosure:
- Telling HMRC (30%)
- Helping HMRC (40%)
- Providing access to records (30%)
For example, if the penalty range is 30%-100% and the total quality of disclosure reduction is 60%, the final penalty is 40% of the maximum range.
LPC penalty ranges based on behaviour
| Disclosure type | Unprompted (Voluntary) | Prompted (HMRC Investigation) |
|---|---|---|
| Non-deliberate (within 12 months) | 0% – 30% | 10% – 30% |
| Non-deliberate (over 12 months) | 10% – 30% | 20% – 30% |
| Deliberate | 20% – 70% | 35% – 70% |
| Deliberate and Concealed | 30% – 100% | 50% – 100% |
Calculating Your LPC tax liability
Step 1: Work out rental income and allowable expenses
- Include all previously undisclosed rental income.
- Deduct legitimate expenses (e.g., property repairs, mortgage interest, letting agent fees).
- Exclude income already reported to HMRC.
Step 2: Calculate Tax Due
Tax liability depends on your income tax rate:
- Basic Rate (20%) – Income up to £50,270
- Higher Rate (40%) – Income between £50,271 and £125,140
- Additional Rate (45%) – Income over £125,140
HMRC provides an LPC tax calculator to help estimate liability for the past 20 years.
Step 3: Consider rental losses
- Rental losses from previous years can be carried forward but only offset against future rental profits.
- Losses cannot be used to reduce tax on other income sources.
What happens after you submit your LPC disclosure?
Acceptance and review
HMRC accepts most disclosures if they believe it is full and accurate. If additional information is required, they may contact you for clarification.
If HMRC finds the disclosure incomplete or inaccurate, they may:
- Reject it and impose higher penalties
- Conduct further investigations
- Consider criminal prosecution in severe cases
Cases where LPC may not be accepted
LPC may not apply if:
- HMRC has already started an investigation before disclosure
- The tax involves proceeds from serious crime (e.g., VAT fraud, tax credit fraud)
What if you can’t pay the full LPC penalty amount?
If unable to pay in full, you must contact HMRC before submitting your disclosure to discuss payment plans. You’ll need to provide:
- Income and expenses details
- Assets and liabilities
- Payment proposal
Failure to pay may result in debt recovery actions by HMRC.
Staying compliant with HMRC for the LPC
Why act now?
Delaying disclosure can lead to higher penalties and legal action. Voluntary disclosure results in lower fines and prevents further scrutiny from HMRC.
We can help with Let Property Campaign disclosures.
Start managing your tax situation with confidence
At Eastfield Accountants, we’re here to simplify your tax matters and help you achieve your global goals.
Get in touch with Mark or Tom today to ensure compliance and secure your peace of mind.