HMRC has recovered a record £107 million from tax investigations into landlords in 2024/25, according to a Freedom of Information request by accountancy firm Price Bailey.

While slightly higher than the previous year, the total is a significant increase from £65.4 million in 2022/23, with HMRC now recouping an average of £13,713 per disclosure.

‘Accidental’ Landlords at Risk

Andrew Park, tax investigations partner at Price Bailey, explains that many landlords caught out are “accidental investors” who misunderstand their tax obligations. “They often kept a property after moving in with a new partner, inherited a property, or temporarily moved abroad,” he says.

Park advises that voluntary disclosure is often the best course of action after receiving an HMRC nudge letter.

Common Tax Mistakes

Key areas where landlords frequently go wrong include:

• Capital vs Revenue expenditure: For example, a significant kitchen upgrade is not deductible, whereas repairs or like-for-like replacements are deductible.
• Mortgage interest relief changes: Landlords face a ‘phantom profit’ trap, where rental income appears profitable on paper but the tax system ignores full debt servicing costs, leading to underreporting.

HMRC’s Long-Term Enforcement

Since the Let Property Campaign launched in 2013, HMRC has recovered around £570 million from 100,332 disclosures — only 4% of the estimated 2.2 million private landlords in the UK.

Park warns that numbers are set to rise, as HMRC enhances data-matching across letting platforms, mortgage lenders, and Land Registry records.

The Making Tax Digital initiative, starting in April 2026, will require landlords to submit quarterly tax returns, giving HMRC real-time oversight of rental income that may previously have gone undisclosed.

Potential Penalties

Landlords should be aware that HMRC can reclaim up to 20 years of unpaid tax and impose fines of up to 100% — or 200% for offshore holdings.  “Landlords must understand their obligations and keep accurate records,” Park concludes. “Failing to do so could lead to substantial financial penalties and ongoing compliance challenges.”