A letter from HMRC about undeclared rental income isn’t the same as a demand — but it is a deadline. Whether it’s a formal nudge letter or you’ve simply realised on your own that some rental income was never reported, the Let Property Campaign gives individual landlords a structured route to put things right, with a clear 90-day window to work out and pay what’s owed.
Ignoring the letter, or waiting to see whether HMRC follows up, is the one move that consistently makes things worse — penalties climb, and in the more serious cases, legal action becomes a real possibility. This guide walks through exactly what to do, in what order, and how far back your disclosure is likely to need to go.
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Doing It Yourself vs Using an Agent
You have a genuine choice here: handle the notification and disclosure yourself, or bring in an agent to manage it on your behalf. Given how much the numbers can shift depending on the correct behaviour classification and look-back period, most landlords find a professional advisor pays for themselves — particularly once the possibility of reducing the number of assessable years or the penalty rate comes into play. Either route follows the same basic sequence below.
Step 1: Notify HMRC of Your Intention to Disclose
As soon as you’re aware that tax is owed on rental income, the first move is registering your intention to disclose through HMRC’s Digital Disclosure Service. At this stage you don’t need to have your figures ready — you’re simply flagging that a disclosure is coming, whether that’s prompted by a nudge letter or done entirely on your own initiative.
Once submitted, HMRC issues a unique Disclosure Reference Number (DRN) — this becomes your reference for all further correspondence — along with a Payment Reference Number to settle the eventual liability.
One detail catches out a lot of joint owners: each person must notify and disclose separately. If a rental property is jointly owned by a married couple, for example, both need to submit their own individual notification and disclosure covering their own share of the income — a single combined submission on behalf of both isn’t accepted.
Step 2: Disclose Your Undeclared Income — Within 90 Days
Once your DRN arrives, the clock starts: you have 90 days from your notification acknowledgment to complete the full disclosure. This needs to cover all the undeclared rental income, the unpaid tax across the relevant years, and the applicable penalty rate — and payment of the full amount is due at the same time as the disclosure itself.
If you genuinely can’t pay everything by the deadline, the fix isn’t to delay the disclosure — it’s to contact HMRC before the deadline to arrange a payment plan. Missing the payment and notification deadline together is what turns a manageable situation into a more difficult one, so treat both dates as fixed.
How Far Back Does Your Disclosure Need to Go?
This is usually the question landlords care about most, and the honest answer is: it depends on why the income wasn’t reported in the first place. Landlords are required to notify HMRC of letting income by 5 October following the end of the relevant tax year — for 2023/24 income, that’s 5 October 2024, with the Self Assessment return itself due by 31 January 2025. Miss those, and the look-back period is set by which of the following applies to your situation.
You took reasonable care
If you were registered for Self Assessment on time and made genuine efforts to keep your affairs in order, but still ended up underpaying, HMRC will generally only ask you to settle up to four years. Staying compliant from here means:
- Filing accurate, on-time returns for the current and future years
- Reporting any outstanding tax from the prior year in the correct return, by deadline
- Completing your disclosure and payment for the three tax years before that
You didn’t take reasonable care
Where you registered on time but ended up underpaying through carelessness — rather than a genuine, well-intentioned mistake — the look-back period extends to a maximum of six years. That means:
- Accurately reporting the current and future tax years by their deadlines
- Correctly reporting the year immediately before the current one, on the return issued for it
- Completing the disclosure and settling what’s owed for the five years before that
You deliberately misled HMRC
Where income was deliberately understated, or HMRC was told nothing about it at all, the look-back period can extend to a maximum of twenty years. HMRC’s default expectation is a six-year disclosure for most landlords — the twenty-year extension is reserved specifically for cases involving deliberate misstatement or a complete failure to disclose. For a deeper breakdown of how this behaviour classification actually works in practice, our guide on which years you need to declare covers it in full.
Why Acting Before the Letter Arrives Is Still Worth Doing
If you haven’t received a letter yet but suspect your rental income position needs correcting, there’s no reason to wait for one. Voluntary disclosure — made before any HMRC contact — consistently attracts lower penalties than a disclosure triggered by a nudge letter. Our voluntary disclosure guide sets out exactly what that penalty difference looks like in practice, with real worked examples.
Putting It All Together
A letter from HMRC is a prompt, not a verdict — the outcome still depends heavily on how quickly and accurately you respond. Notify promptly, gather the right documentation for the years that matter, and get the behaviour classification right before you submit, since that single judgement call affects both how many years you’re disclosing and what penalty rate applies. For the complete picture on eligibility, process, and worked examples, our Let Property Campaign guide brings everything together in one place.
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