HMRC is writing to landlords to review rental income declarations, leveraging data from tenancy deposit schemes and statutory reporting systems to identify discrepancies with tax returns.
HMRC has begun writing to landlords to encourage them to review whether all rental income has been declared and to remind them of their obligations under Making Tax Digital for Income Tax. The letters reference information HMRC receives from tenancy deposit schemes and other statutory reporting systems, which are being used to identify landlords whose tax returns may not accurately reflect their property income.
What This Means for Accountants
The compliance campaign signals a significant shift in HMRC's data analytics capabilities and enforcement priorities. Practitioners advising landlord clients should expect these letters to become more frequent as the tax authority systematizes cross-matching between third-party data sources and self-assessment returns.
HMRC asks landlords who receive these letters not to ignore them and to review their position and take action by the deadline stated in the correspondence. Non-compliance risks formal enquiries and late-payment penalties.
Key Compliance Points
For your clients who let property, emphasize the importance of:
- Maintaining comprehensive records of all rental income from all properties
- Ensuring consistency between deposits received and rental income reported
- Understanding that HMRC will now routinely cross-reference third-party platform data (including property management companies, agents, and deposit custodians) against Self Assessment returns
The practical implication is clear: the era of manual tax compliance is ending. HMRC's systematic data aggregation means that gaps between third-party reporting and client returns are increasingly likely to be identified automatically, triggering enquiries.
Timing Context
Making Tax Digital for Income Tax became mandatory from 6 April 2026 for sole traders and landlords with combined gross income from self-employment and property exceeding £50,000. From April 2027, it will apply to those with qualifying income above £30,000, and from April 2028, it will apply to those with qualifying income above £20,000. These compliance campaigns are likely to intensify as MTD enrolment expands and data flows to HMRC's systems increase.
Recommended Action
Accountants should proactively contact landlord clients to ensure all rental income is accurately recorded and reported. This is particularly important for those managing multiple properties, mixed use, furnished holiday lettings, or overseas properties, where classification errors are common. The data-matching approach HMRC is now employing makes remedial filing or voluntary corrections increasingly valuable as early warning defences.
Further reading
- UK tax & accounting resource library — the Acts, regulations and standards referenced in our coverage.
- Accountancy, tax & regulatory bodies — HMRC, Companies House, ICAEW, ACCA and the rest, with what each one does.
- Find an accountant — AOPA member firms across the UK, searchable by town and service.
- How to find a good accountant — what to check before you appoint one.