Author: Nelson

Is the Let Property Campaign Still Running in 2026? Everything Landlords Need to Know

Post author By Nelson
Post date March 2, 2026

If you are a landlord with undeclared rental income, you’ve likely heard whispers of a special HMRC scheme that allows you to “come clean” on favorable terms. But as we move deeper into the year, many property owners are asking: Is the Let Property Campaign still running in 2026? The short answer is a resounding yes. However, while the opportunity remains open, the technology HMRC uses to find you has become significantly more aggressive.

In this comprehensive guide, we will explore why the Let Property Campaign remains one of the longest-running disclosure opportunities in UK tax history, what has changed for landlords this year, and why waiting any longer to settle your affairs could be the most expensive mistake of your financial life. Whether you are managing properties in Windsor, Oxford, or London, understanding the current status of this campaign is vital for your peace of mind.

Featured Snippet: Is the Let Property Campaign active in 2026?

Yes, the Let Property Campaign is still active in 2026. It remains an open-ended disclosure opportunity for individual landlords to declare unpaid rental tax. By coming forward voluntarily before HMRC contacts you, you can benefit from lower penalty rates and a structured pathway to regularize your tax affairs.

The Longevity of the Let Property Campaign: Why is it Still Here?

The Let Property Campaign first launched in 2013. Most tax amnesties or “campaigns” last for 12 to 18 months, yet here we are in 2026, and the digital doors are still wide open. Why?

1. The Digital Revolution in Tax Tracking

HMRC’s “Connect” computer system is the primary reason the campaign hasn’t closed. Connect now cross-references billions of data points, including Land Registry records, bank interest, estate agent lists, and even short-term let platforms like Airbnb. Because the data is constantly updating, HMRC continuously finds “new” landlords who haven’t registered for Self Assessment.

2. Efficient Revenue Collection

It is far cheaper for the Treasury if you calculate your own tax and hand it over than it is for them to hire an inspector to perform a manual audit. The campaign serves as a “self-service” portal for compliance, which remains a priority for the government in 2026 as they look to close the tax gap.

3. The Surge in Professional Landlords

With the shifting economy, more people have become “accidental landlords”—perhaps moving in with a partner or inheriting a home. HMRC recognizes that many people fall into non-compliance through ignorance rather than malice, and the LPC provides a way to bring these people into the system without the need for criminal proceedings.

What Has Changed for Landlords in 2026?

While the campaign itself is the same, the environment surrounding it has shifted. If you are a landlord in Reading or Slough, you are operating under a different set of pressures than you were a few years ago.

The “Nudge Letter” Evolution

In 2026, HMRC has moved from broad-spectrum warnings to highly targeted “nudge letters.” These letters are no longer generic; they often imply that HMRC already has specific evidence of your rental activity. The moment you receive one of these, your window for an “unprompted” disclosure—which carries the lowest penalties—is effectively closing.

Section 24 and Interest Rates

The full impact of mortgage interest relief restrictions (Section 24) is now felt by all individual landlords. This means your “profit” for tax purposes might be much higher than the actual cash left in your pocket. Combined with higher interest rates on late payments, a tax debt from five years ago is significantly more expensive to settle in 2026 than it was in 2022.

Step-by-Step Guide: How to Disclose in 2026

If you’ve decided to use the Let Property Campaign to fix your tax affairs, follow this professional strategy framework to ensure the best possible outcome.

Step 1: The Notification Phase

You must notify HMRC of your intention to make a disclosure. This “stops the clock” in some regards, as it shows you are willing to cooperate. This is done through the Digital Disclosure Service (DDS).

Step 2: The 90-Day Calculation Window

Once you notify them, you have 90 days to prepare the figures. You will need:

Total rental income for all undeclared years.
A full list of allowable expenses (repairs, agent fees, insurance).
Your other income figures (P60, dividends) to determine your tax bracket.

Step 3: Determining Behavior

You must decide if your error was “Reasonable Care,” “Careless,” or “Deliberate.” This is a legal determination. If you get this wrong, HMRC can reject your disclosure. This is why many landlords in Oxford and Windsor seek professional help to draft their narrative.

Step 4: Submission and Payment

You submit the figures, the interest, and the penalty you’ve calculated. Payment is usually required at the time of submission, though payment plans can be negotiated if you are in financial hardship.

Pros and Cons: Using the Campaign in 2026

Pros	Cons
Lower Penalties: Voluntary (unprompted) disclosures often result in 0% to 20% penalties.	Interest Costs: Statutory interest is mandatory and can be high for old debts.
Asset Protection: Settling now prevents HMRC from placing charges on your property.	Financial Scrutiny: You are essentially opening your “books” to HMRC.
Peace of Mind: No more worrying about the “brown envelope” in the mail.	90-Day Deadline: Once you start, you must finish quickly.

Why You Should Act Now (The “Prompted” Risk)

The biggest risk in 2026 is moving from an unprompted to a prompted disclosure.

Unprompted: You tell them. Penalty for a careless mistake = 0% – 30%.
Prompted: They tell you. Penalty for the same mistake = 15% – 30%.

In high-value rental markets like London, that 15% difference can represent tens of thousands of pounds. HMRC is currently running a massive data-matching exercise focused on the South East, specifically targeting landlords who have not declared income since the 2021/22 tax year.

How Felix & Co. Supports Landlords in Your Area

Navigating the Let Property Campaign requires a blend of tax expertise and a human touch. We don’t just “file papers”; we protect your livelihood.

Windsor & London: We specialize in high-net-worth disclosures where complex tax brackets and multiple properties make the calculations difficult.
Oxford: We help academic and professional landlords who may have moved abroad and inadvertently became “Non-Resident Landlords” without following the correct tax procedures.
Reading & Slough: We provide rapid response services for those who have received nudge letters and need to minimize their prompted penalty rates.

SCHEDULE A CALL WITH OUR SPECIALISTS

Overview: Quick Summary

Is it open? Yes, the Let Property Campaign is fully operational in 2026.
Who is it for? Individual landlords (not companies) letting residential property.
What are the benefits? Reduced penalties and avoidance of criminal prosecution.
What is the risk of waiting? HMRC’s “Connect” system is likely to find undeclared income, leading to “prompted” status and higher fines.
How long does it take? 90 days from notification to final submission.

FAQ: People Also Ask

1. Will the Let Property Campaign close soon?

There is no official closing date. However, HMRC can withdraw the “favorable terms” at any time. As their data-matching becomes more perfect, the need for a “voluntary” scheme diminishes, so acting now is safer than waiting for a potential closure.

2. I only have one property. Does HMRC really care?

Yes. HMRC’s system doesn’t differentiate between a landlord with fifty properties and a landlord with one. If the Land Registry shows you own a second home and your tax return doesn’t show rental income, you are a target for a nudge letter.

3. Can I declare income from 10 years ago?

Yes. The Let Property Campaign allows you to go back up to 20 years if the non-disclosure was deliberate. If it was a “reasonable excuse,” you may only need to go back 4 years.

4. What if I can’t afford the tax bill?

HMRC is generally willing to set up a “Time to Pay” arrangement if you are honest and proactive. A specialist accountant can help negotiate these terms so you aren’t forced to sell your property to pay the tax.

5. Are Airbnb and short-term lets included?

Technically, Airbnb hosts can use the Digital Disclosure Service, but the Let Property Campaign is specifically optimized for residential landlords. If you have “Rent a Room” income or short-term lets, you should still disclose, but the rules on expenses may vary.

6. How does HMRC find out about my rental income?

They use “Connect” to scan the Land Registry, the Electoral Roll, bank accounts (for regular large deposits), and data shared by estate agents and local councils (housing benefit payments).

7. Do I need an accountant to do this?

You can do it yourself, but it is high-risk. One mistake in your expense calculation or “behavior” categorization can lead to HMRC rejecting the disclosure and opening a full, intrusive audit.

The Best Time to Act is Now

The Let Property Campaign is still running in 2026, but it is not a “free pass.” It is a window of opportunity that is gradually being crowded by more advanced HMRC surveillance.

For landlords in Slough, Reading, Windsor, and London, the choice is simple: lead the conversation with HMRC on your terms and save thousands in penalties, or wait for them to lead the conversation on their terms. By using this campaign effectively, you can wipe the slate clean, protect your assets, and ensure your property investment remains a source of profit rather than a source of stress.

Don’t let your tax history haunt your future.

SCHEDULE A CALL WITH OUR EXPERTS

Helping you pay only what you legally owe.

News

The 90-Day Clock: How to Prepare Your Documentation for an LPC Submission

Post author By Nelson
Post date February 21, 2026

Tax Disclosure

Once you notify HMRC of your intent to join the Let Property Campaign (LPC), the countdown begins. You are issued a unique Disclosure Reference Number (DRN) and a Payment Reference Number (PRN), and you have exactly 90 days to calculate your figures, submit your disclosure, and pay the balance. Tax Disclosure.

At Felix Accountants, we call this the “Execution Phase.” The 90-day window sounds generous, but when you are dealing with years of missing bank statements and complex tax rules, time disappears quickly. Here is your roadmap to a successful submission.

1. The Timeline: Notification to Settlement

The LPC is a structured process. Missing the 90-day deadline can result in HMRC rejecting your disclosure and opening a formal (and much more expensive) enquiry.

Day 1: Formal Notification via the Digital Disclosure Service (DDS).
Day 2–60: The “Deep Dive.” This is when we reconstruct your rental accounts.
Day 60–80: We calculate the “Tax Gap,” statutory interest, and the behavior-based penalty.
Day 80–90: Formal submission of the disclosure and payment of the total amount.

2. Essential Documentation Checklist

To make an accurate disclosure, we need to move beyond “estimates” wherever possible. You should begin gathering:

Income Records: Tenancy agreements, letting agent annual statements, or bank statements showing rent deposits.
Expense Evidence: Invoices for repairs, insurance certificates, management fee statements, and utility bills for void periods.
Mortgage Data: Annual mortgage interest certificates (usually provided by your lender every January).
Other Income Info: Your P60 or P11D (if employed) or self-employed accounts. Your rental tax is determined by your total income, so we need the full picture to apply the correct tax bands.

3. Dealing with Missing Records

What if you don’t have bank statements from six years ago?

Bank Requests: Most banks can provide historic statements for a small fee, though this can take 2–3 weeks (hence the urgency).
Reasonable Estimates: If records are truly lost, HMRC allows for “Best Estimates.” We can use local rental market data and average maintenance costs for your property type to build a defensible set of figures.
The Narrative: We must include a note in your disclosure explaining why records are missing and how we reached our estimates.

4. Calculating the “Add-Ons”: Interest and Penalties

Your disclosure isn’t just about the tax. HMRC expects you to “Self-Assess” two other figures:

Statutory Interest

This is not a penalty; it is compensation to the government for not having the money on time. Interest rates for late tax have risen significantly in 2025 and 2026. We use specialized software to calculate interest from the date the tax should have been paid to the current date.

The Penalty Offer

You must make a “Formal Offer” of a penalty. As discussed in previous articles, this is based on your behavior:

Reasonable Care: 0%
Careless (Unprompted): 0% – 30%
Deliberate (Unprompted): 20% – 70%

5. Making the “Formal Offer”

A unique feature of the LPC is that it is a Contractual Tax Disclosure
. When we submit the form, we are making a “Formal Offer” to pay a specific amount. If HMRC accepts this offer, it becomes a legally binding contract that prevents them from re-opening those specific years in the future (provided your disclosure was honest).

6. What If You Can’t Pay Everything on Day 90?

If the final bill is larger than expected, do not wait until Day 90 to tell HMRC. * We can negotiate a “Time to Pay” (TTP) arrangement.

HMRC is generally more open to payment plans (spreading the cost over 6–12 months) if the request is made as part of a voluntary disclosure.

Frequently Asked Questions (FAQs)

Q1: Can I submit the disclosure before the 90 days are up?

Yes. You can submit as soon as your figures are ready. In fact, submitting early reduces the amount of statutory interest you have to pay.

Q2: What happens if I miss the 90-day deadline?

HMRC may remove you from the campaign. This means you lose the “favourable terms” and lower penalties. They may then open a formal enquiry into your affairs.

Q3: Does HMRC check every single disclosure?

HMRC “reviews” every submission. If your figures look sensible and match their “Connect” data, they usually issue an acceptance letter within 30–60 days. If the figures look suspiciously low, they will ask for evidence.

Q4: Do I need to send my receipts to HMRC with the disclosure?

No. You don’t send the receipts with the form, but you must keep them for 6 years after the disclosure. HMRC can ask to see your “working papers” at any time during that period.

Q5: Can Felix Accountants handle the payment for me?

You usually pay HMRC directly using your PRN (Payment Reference Number). However, we ensure you have the exact bank details and references to ensure your payment is allocated correctly to your disclosure.

Beat the Crock with Felix Accountants

The 90-day window is the final hurdle to tax peace of mind. Let Felix Accountants take the lead on the calculations and the paperwork, so you can focus on the future of your property investment.

Start My 90-Day Disclosure Process

News

HMRC ‘Connect’: How Big Data is Finding Undeclared Landlords in 2026

Post author By Nelson
Post date February 17, 2026

For decades, many landlords believed that if they didn’t use a letting agent or if their tenants paid in cash, they were “invisible” to the tax man. In 2026, that era is officially over. HMR Revenue & Customs (HMRC) now utilizes one of the most sophisticated data-mining systems in the world: HMRC Connect. This software is the engine behind the thousands of “nudge letters” being sent to UK property owners. At Felix Accountants, we want our clients to understand how this technology works so they can appreciate the urgency of the Let Property Campaign (LPC).

1. What is the Connect System?

Connect is an AI-powered data warehouse that holds over 55 billion items of data. It doesn’t just store information; it “crawls” through dozens of different databases to find “inconsistencies” in your lifestyle versus your declared income.

In 2024-25 alone, this system helped HMRC recover an extra £4.6 billion in underpaid tax. By 2026, its reach has expanded to include real-time feeds from digital platforms and international banks.

2. Where Does the Data Come From?

Connect creates a “web” of your financial life by pulling from over 30 different sources:

The Land Registry: Every property purchase, sale, and mortgage charge is logged here.
Stamp Duty Records: HMRC knows exactly how much you paid for your second home.
Letting Agent Returns: Letting agents are legally required to provide annual lists of their landlord clients.
Digital Platforms (Airbnb/Booking.com): Since 2024, these platforms have shared host income, booking numbers, and property locations directly with HMRC.
Tenancy Deposit Schemes: If you protect a deposit (as required by law), you have just created a digital record of your tenancy.
Council Tax & Electoral Roll: If you are registered to vote at Address A but own Address B, and Address B has a different person paying council tax, Connect flags a potential rental.
Social Media Scrapping: In 2026, HMRC uses AI to monitor public social media for “lifestyle indicators.” A landlord posting about luxury holidays while declaring a £5,000 annual profit may trigger an audit.

3. The “Inconsistency” Flag: How You Get Targeted

HMRC doesn’t need “proof” to send you a nudge letter; they only need an anomaly.

Example Scenario:

Source A (Land Registry): Shows you bought a second flat in Bristol in 2022.
Source B (Bank): Shows regular monthly deposits of £1,200 labeled “Flat 2.”
Source C (Tax Return): Shows zero rental income declared.

Connect automatically cross-references these three points. The system then generates a “nudge letter” or, in more serious cases, assigns an investigator to open a Compliance Check.

4. Making Tax Digital (MTD) 2026: The Next Level

As of April 2026, the reporting rules have tightened even further. Landlords with a gross rental income over £50,000 must now use Making Tax Digital for Income Tax (MTD IT).

You must keep digital records of every penny of rent and every expense.
You must send quarterly updates to HMRC using compatible software.
The Impact: This moves property tax from an “annual event” to a “real-time” surveillance system. If you aren’t already compliant for past years, the start of MTD makes your history much more likely to be scrutinized.

5. Can You “Opt-Out” of the Big Data Search?

Short of selling your properties and closing your bank accounts, you cannot opt-out of HMRC’s data gathering. The UK has also signed up to the Common Reporting Standard (CRS), meaning even if your rental income is in an overseas bank account, that bank is likely sending your data back to the UK.

The only way to “stop” an investigation before it starts is to make a Voluntary Disclosure.

6. How Felix Accountants Uses This Information to Help

Because we understand the “Connect” logic, we can help you:

Pre-emptive Audits: We can look at your bank statements and Land Registry records exactly how HMRC does to find “red flags” before they do.
Accurate Disclosures: When we submit your Let Property Campaign disclosure, we ensure it matches the digital footprint HMRC already has. Disclosing less than what Connect shows is the fastest way to trigger a full-scale fraud investigation.
Future Compliance: We set you up with MTD-compliant software so your digital records are “audit-proof” moving forward.

Frequently Asked Questions (FAQs)

Q1: Does HMRC really look at my Instagram or Facebook?

HMRC has confirmed they use AI to monitor social media as part of investigations into suspected tax fraud. While they don’t look at every landlord’s holiday photos, they use it to verify “lifestyle” claims during a formal enquiry.

Q2: My tenant pays me in cash. Am I safe from Connect?

Not necessarily. Even if there’s no bank trail, Connect sees the Land Registry ownership and the fact that a different person is paying Council Tax at that address. The “absence” of income where a property is clearly being lived in is itself a red flag.

Q3: How far back does the “Connect” data go?

HMRC has been building this database since 2010. They have over a decade of historical records that can be searched at any time.

Q4: I use an Airbnb but I’m under the £7,500 Rent-a-Room limit. Will I be flagged?

You might still receive a nudge letter because Airbnb reports the “gross” income. If you receive a letter, don’t ignore it; we can help you respond to HMRC explaining that your income is covered by the Rent-a-Room relief.

Q5: Is it better to wait for HMRC to contact me?

Absolutely not. Once Connect triggers a letter, you move from “Unprompted” to “Prompted” status, which instantly increases your potential penalties by 15-30%.

Don’t Let the AI Find You First

In 2026, tax evasion is a “data problem” that HMRC is winning. If you have undeclared property income, the Let Property Campaign is your only legal exit ramp.

Get my ‘Connect’ Risk Assessment

News

Mortgage Interest & Maintenance: Maximize Your Expenses in an LPC Disclosure

Post author By Nelson
Post date February 17, 2026

Rental Tax relief

When you are making a historical disclosure via the Let Property Campaign, you aren’t just telling HMRC about the rent you received; you are also claiming the deductions you were entitled to over those years. Rental Tax relief.

At Felix Accountants, our expertise lies in identifying every possible “allowable expense” to ensure you only pay tax on your actual profit, not your gross turnover. In a 2026 disclosure, navigating the complex rules of Section 24 mortgage interest and the “Repair vs. Improvement” debate is where thousands of pounds can be saved.

1. The Section 24 “Mortgage Interest” Trap

Since 2020, the way landlords claim mortgage relief has changed fundamentally. You can no longer deduct mortgage interest from your rental income to reduce your taxable profit. Instead, you receive a 20% Tax Credit.

How it works in your disclosure:

If you are disclosing for years after 2020:

We calculate your tax on your full rental income (minus maintenance and fees).
We then take 20% of your mortgage interest and subtract that figure from your total tax bill.

The Impact: If you are a higher-rate (40%) taxpayer, you are effectively “losing” 20% of the relief you used to get. However, for many “accidental landlords” who remain in the basic rate band, the 20% credit still covers the full interest cost.

2. Maintenance: Is it a “Repair” or an “Improvement”?

This is the most contested area in any HMRC disclosure.

Repairs (Revenue Expenses): These are deductible from your rental income now.
Improvements (Capital Expenses): These cannot be used in your LPC disclosure. Instead, they are saved to reduce your Capital Gains Tax when you sell the property.

Item	Classification	Tax Treatment
Fixing a broken boiler	Repair	Deduct from Rent (LPC)
Repainting between tenants	Repair	Deduct from Rent (LPC)
Replacing broken windows	Repair	Deduct from Rent (LPC)
Building an Extension	Improvement	Deduct from Sale (CGT)
Installing a New Conservatory	Improvement	Deduct from Sale (CGT)
Upgrading a Kitchen	Improvement*	Deduct from Sale (CGT)

*Note: If you replace an old kitchen with a “like-for-like” modern equivalent, it is often treated as a repair. If you upgrade from laminate to granite or add more cupboards, it becomes an improvement.

3. The “Wholly and Exclusively” Rule

To be deductible in your disclosure, an expense must be incurred “wholly and exclusively” for the purposes of the property business.

Allowable: Letting agent fees, landlord insurance, Gas Safety certificates, and accountancy fees for the disclosure itself.
Partial: If you use your car to visit the property, we can claim 45p per mile for those specific journeys.
Not Allowable: Your personal phone bill (unless you have a dedicated “landlord” line) or clothing bought for DIY work.

4. Replacement of Domestic Items Relief (RDIR)

In your disclosure, we can claim for the cost of replacing furnishings and appliances provided for the tenant’s use. This includes:

Movable furniture (beds, sofas).
Household appliances (fridges, washing machines).
Floor coverings and curtains.

Crucial Rule: You can only claim the cost of the replacement, not the initial purchase of the first item you put in the house.

5. Maximizing Your “Pre-Letting” Expenses

Many landlords spend thousands fixing up a property before the first tenant moves in.

If the work was to fix “wear and tear” from the previous owner so it was in a fit state to rent, these are often Capital (Improvement) costs.
However, if the work was “revenue” in nature (decorating, minor repairs), we can often claim these as “Pre-trading expenses” provided they were incurred within 7 years of the rental start date.

6. How Felix Accountants Adds Value

In an LPC disclosure, every £1,000 of expenses we find could save you up to £400 in tax and £100 in penalties.

Historical Record Reconstruction: We help you dig through old bank statements to find forgotten costs.
Aggressive (but Legal) Deduction: We ensure you claim the maximum mileage and home-office allowances.
Interest & Penalty Mitigation: By lowering the “tax gap” through expenses, the interest and penalties automatically decrease.

Frequently Asked Questions (FAQs)

Q1: I don’t have receipts from 4 years ago. Can I still claim?

Yes. HMRC accepts “Reasonable Estimates” if you can show a bank transfer or a clear need for the work (e.g., a plumber’s visit showing on a statement without the invoice).

Q2: Can I claim my own time if I did the DIY work myself?

No. You can only claim for the cost of materials. You cannot “charge” your own business for your labor.

Q3: Are letting agent fees deductible?

Absolutely. 100% of management fees, finders’ fees, and inventory costs are deductible from your rental income before tax is calculated.

Q4: What about the “Property Allowance”?

You have a £1,000 tax-free property allowance. If your total expenses are less than £1,000, it is usually better to just claim this “flat rate” rather than counting individual receipts.

Q5: Can I deduct my mortgage capital repayments?

No. Only the interest element of your mortgage payment qualifies for the 20% tax credit. The part of your payment that pays off the loan itself is not a tax-deductible expense.

Lower Your Disclosure Bill Today

Don’t pay more than you legally owe. A specialist review of your expenses is the most effective way to reduce the cost of your Let Property Campaign settlement.

Start My Expense Audit

Blogs FAQs News

4, 6, or 20 Years? How HMRC Decides How Far Back to Audit Your Property

Post author By Nelson
Post date February 14, 2026

Tax Look-back

When landlords realize they have undeclared rental income, the first question they ask is usually: “How many years of back-tax am I going to have to pay?” There is a common misconception that HMRC can only look back at the last few years. In reality, the “statute of limitations” for Tax Look-back is flexible. In 2026, under the Let Property Campaign (LPC), the length of your “look-back” period depends entirely on your behaviour. HMRC categorizes your actions into three buckets: Reasonable Care, Careless, and Deliberate.

At Felix Accountants, we specialize in analyzing your history to ensure you only pay for the years legally required. Here is a breakdown of the 4, 6, and 20-year rules.

1. The 4-Year Rule: “Reasonable Care”

If you can prove that you took reasonable care but still made a mistake, HMRC is limited to looking back only 4 years.

What defines “Reasonable Care”?

HMRC acknowledges that tax is complicated. You might fall into this category if:

You sought advice from a professional that turned out to be incorrect.
You made an honest mathematical error despite keeping good records.
You reasonably believed you didn’t owe tax (e.g., your expenses legitimately wiped out your profit, but you didn’t realize you still had to file a nil return).

The Result: You pay the tax and interest for the last 4 years, and often, you can negotiate a 0% penalty.

2. The 6-Year Rule: “Careless” Behaviour

The most common category for “accidental landlords” is Careless Behaviour. This applies if you failed to tell HMRC about your rental income because you didn’t check the rules, but you weren’t trying to hide the money.

Examples of Careless Behaviour:

You moved in with a partner and rented your old flat but “forgot” to tell HMRC.
You assumed your letting agent was paying your tax for you.
You didn’t keep proper records and guessed your figures.

The Result: HMRC can go back 6 years. Penalties for an unprompted disclosure in this category typically range from 0% to 30%.

3. The 20-Year Rule: “Deliberate” or “Failure to Notify”

This is the most serious category. If HMRC believes you knew you had a tax obligation and chose to ignore it, or if you failed to notify them that you had started a rental business, they can go back 20 years.

What defines “Deliberate” Behaviour?

You intentionally kept rental income out of your tax returns to pay less tax.
You provided false information to HMRC or concealed records.
You have been a landlord for a decade but never registered for Self Assessment.

The Result: You must disclose every year of income for the last two decades. Penalties for deliberate acts are much higher, ranging from 20% to 100% (and up to 200% if the income involves offshore accounts).

4. The “Offshore” Exception: The 12-Year Rule

In 2026, there is a specific mid-tier rule for landlords who live abroad or have overseas rental property. If an error involves offshore income or gains, and it was “Careless” or even if “Reasonable Care” was taken, HMRC has a standard look-back period of 12 years. The only way to stick to 4 or 6 years in an offshore context is to prove a very specific “reasonable excuse.”

5. How Behaviour Impacts Your Penalty (The “Felix” Strategy)

At Felix Accountants, our job is to act as your advocate. HMRC will often start by assuming a landlord was “Deliberate” to maximize the tax collected. We counter this by:

Evidence-Based Arguments: We present your “Reasonable Excuse” (e.g., serious illness, bereavement, or reliance on a trusted family member) to move you from the 20-year bracket to the 6 or 4-year bracket.
Proactive Disclosure: By using the Let Property Campaign voluntarily, we demonstrate that you are not “concealing” income, which is the strongest defense against the 20-year rule.

Tax Look-back

Behaviour	Assessment Period	Penalty (Unprompted)
Reasonable Care	4 Years	0%
Careless	6 Years	0% – 30%
Deliberate	20 Years	20% – 70%
Deliberate & Concealed	20 Years	30% – 100%

6. Can HMRC Find Me After 20 Years?

Many landlords think, “I’ve been doing this for 15 years and haven’t been caught yet; surely I’m safe?” In the digital age, the answer is no. HMRC’s Connect system has a “long memory.” When you eventually sell the property, the Land Registry data from 20 years ago will be cross-referenced with your tax history. If there’s a 20-year gap where you owned a second property but paid no tax, an investigation is highly likely at the point of sale.

Frequently Asked Questions (FAQs)

Q1: What if my rental business made a loss 5 years ago?

If you made a legitimate tax loss in a specific year (e.g., due to major repairs), that year does not “count” toward your liability, though it still falls within the look-back window. We can often use those losses to offset profits in later years.

Q2: My father died and left me a rental property he never declared. How many years do I pay?

For deceased estates, the rules are slightly different. Usually, HMRC is limited to looking back 6 years prior to the date of death, provided the executors settle the matter promptly.

Q3: Does the 20-year rule apply if I simply didn’t know the law?

HMRC generally argues that “ignorance of the law is no excuse.” However, if we can show you had a “Reasonable Excuse” for not knowing (such as being given bad advice by a previous accountant), we can often fight to keep the period to 6 years.

Q4: If I come forward now, can I choose which years to pay?

No. An LPC disclosure must be “full and complete.” You cannot “cherry-pick” years. If you disclose 5 years but HMRC finds you’ve been a landlord for 15, they will reject your disclosure and open a fraud investigation.

Q5: Will HMRC ask for bank statements from 20 years ago?

If you are in the 20-year bracket and don’t have records, we use “Reasonable Estimations.” We can use historic rental averages and ONS data to recreate your accounts in a way that HMRC will accept.

Know Your Years, Protect Your Future

Determining your “behaviour” is the most technical part of a tax disclosure. Don’t guess and end up paying for 20 years when you only owed 6.

Contact Felix Accountants today. We will review your history and ensure your disclosure is handled with the correct look-back period.

Book my 4-6-20 Year Review

News

The £7,500 Limit: When Your Lodger Income Triggers a Tax Bill

Post author By Nelson
Post date February 10, 2026

In 2026, with the cost of living remaining high, more UK homeowners than ever are turning to the Rent-a-Room Scheme. It’s a fantastic government incentive that allows you to earn a significant amount of tax-free income by letting out a furnished room in your main home.

However, there is a “magic number” you need to watch: £7,500. Go even a penny over this gross limit, and your tax position changes instantly. At Felix Accountants, we help live-in landlords navigate this threshold to ensure they stay compliant without overpaying. Here is the essential guide to the £7,500 limit.

1. How the Rent-a-Room Scheme Works in 2026

The scheme is designed for “resident landlords.” To qualify:

The property must be your only or main residence.
The room must be furnished.
You can be an owner-occupier or a tenant (as long as your lease allows sub-letting).

The Automatic Exemption

If your total gross receipts from lodgers are £7,500 or less per tax year, the income is tax-free. You don’t even need to tell HMRC about it unless you are already filing a Self Assessment tax return for other reasons.

2. What Counts Towards the £7,500?

A common mistake landlords make is thinking only the “rent” counts. In the eyes of HMRC, your gross receipts include everything the lodger pays you:

Base Rent: The monthly fee for the room.
Utility Contributions: If the lodger pays a share of the gas, electricity, or Wi-Fi.
Services: Any extra charges for laundry, cleaning, or providing meals.

Example: If you charge £600 a month in rent and £50 for bills, your annual gross receipts are £7,800. Even though your “profit” might be low, you have officially exceeded the £7,500 threshold.

3. The “Joint Owner” Trap: £3,750

If you own your home jointly with a spouse, partner, or friend, the £7,500 allowance is split equally.

Each person has a tax-free limit of £3,750.
This applies regardless of how you actually split the money. If you have one lodger paying £6,000 a year, and the property is jointly owned, you both have exceeded your individual £3,750 limits and must both file a tax return.

4. You’ve Gone Over £7,500: What Happens Next?

If you exceed the limit, you must complete a Self Assessment tax return. You then have two ways to calculate your tax:

Method A: The Rent-a-Room Method (Best for low expenses)

You pay tax only on the amount above £7,500. You cannot deduct any expenses (like repairs or utilities) because the £7,500 allowance is designed to cover them.

Example: Income is £9,000. You pay tax on £1,500.

Method B: The Actual Profit Method (Best for high expenses)

You ignore the Rent-a-Room scheme and pay tax on your actual profit (Total Income minus Actual Expenses).

Example: Income is £9,000, but you spent £3,000 on a new boiler for the lodger’s room and increased utility bills. Your profit is £6,000. In this case, Method B is better because you pay tax on £6,000 instead of the £7,500 “excess.”

Rent-a-Room Scheme

5. Using the Let Property Campaign for Lodger Income

If you’ve had a lodger for several years and only just realized you were over the £7,500 limit, don’t panic. The Let Property Campaign (LPC) isn’t just for whole-house rentals; it’s also the perfect tool for live-in landlords to “catch up.”

Voluntary Disclosure: By coming forward via the LPC before HMRC finds you (perhaps via Airbnb data sharing), you can secure the lowest possible penalties.
Multiple Years: We can help you look back at your history, determine which years you were over the limit, and settle the total bill in one go.

6. How Felix Accountants Optimizes Your Lodger Tax

We don’t just “file your taxes”—we strategize.

Yearly Election: We calculate both Method A and Method B every year to see which saves you more. You can switch between them annually!
Expense Tracking: We help you identify “allowable expenses” you might have missed if you choose Method B.
HMRC Correspondence: If you receive a nudge letter regarding Airbnb or lodger income, we take over the communication.

Frequently Asked Questions (FAQs)

Q1: Can I use the Rent-a-Room scheme for an Airbnb?

Yes, provided the room is in your main home and you are living there during the guest’s stay. If you rent out a separate, self-contained annex or a second home, you cannot use this scheme.

Q2: Can I claim the £1,000 Property Allowance as well?

No. You cannot use both the Rent-a-Room relief and the £1,000 Property Allowance against the same income.

Q3: What if I have two lodgers?

The £7,500 limit is per property, not per lodger. If two lodgers pay you £5,000 each, your total income is £10,000, and you are over the limit.

Q4: My lodger is a “Monday to Friday” worker. Does the limit still apply?

Yes. The nature of the stay doesn’t matter, as long as the room is in your main home and furnished.

Q5: I share the house with my partner, but the mortgage is only in my name. Is the limit £7,500 or £3,750?

If you are the sole legal owner and the rent is paid to you, you usually get the full £7,500 allowance. If your partner starts receiving a share of the income, the limit splits to £3,750 each.

Don’t Let a Spare Room Become a Tax Burden

Having a lodger should be a financial help, not a source of stress. If you think you might be close to or over the £7,500 limit, Felix Accountants can help you crunch the numbers.

Book a Lodger Tax Review

News

Moving In With a Partner? The Tax Traps of Renting Your First Home

Post author By Nelson
Post date February 6, 2026

For many, moving in with a partner is a major romantic milestone. It often leads to a practical question: “What do we do with my flat?” If you decide to keep your original home and rent it out, you have officially joined the ranks of the “Accidental Landlord.”

While it seems like a straightforward way to cover your mortgage or build an investment, renting out your former residence triggers a series of tax obligations that many people overlook until they receive a “nudge letter” from HMRC. At Felix Accountants, we see hundreds of couples who didn’t realize that a simple change in living arrangements could lead to complex tax filings and potential penalties.

Here is everything you need to know about the tax implications of renting your first home when you move in with a partner.

1. Income Tax: Your New “Second Job”

The moment a tenant pays you rent, you have started a business in the eyes of HMRC.

The £1,000 Property Allowance

If your total rental income is less than £1,000 per year, you generally don’t need to do anything. However, for most landlords renting out a whole property, income will far exceed this.

Registering for Self Assessment

If your rental income is over £1,000, you must register for Self Assessment. You must notify HMRC by 5 October following the tax year in which you started receiving rent.

Example: If you moved in with your partner and started renting your flat in September 2025, you must register by 5 October 2026.

How Much Tax Will You Pay?

Rental profit is added to your other income (like your salary).

Basic Rate (20%): Total income between £12,571 and £50,270.
Higher Rate (40%): Total income between £50,271 and £125,140.
Additional Rate (45%): Total income over £125,140.

2. The Mortgage Interest Trap (Section 24)

Ten years ago, landlords could deduct their full mortgage interest from their rental income before paying tax. This is no longer the case.

You now pay tax on the full amount of rent minus “allowable expenses” (like insurance and repairs). You then receive a 20% tax credit for your mortgage interest.

The Risk: If you are a higher-rate taxpayer (40%), you are still paying 40% tax on the income used to pay the mortgage but only getting 20% back in relief. This can lead to situations where your “cash flow” is positive, but you are actually losing money after tax.

3. Stamp Duty (SDLT): The Cost of the “Next” Home

If you move in with your partner but decide to buy a new home together while keeping your old one, you will likely hit the Stamp Duty Surcharge.

In 2026, if you own one property (your original home) and buy another, the new purchase is considered an “additional dwelling.” This triggers a 5% surcharge on top of the standard Stamp Duty rates. On a £400,000 house, this surcharge alone adds £20,000 to your moving costs.

The 36-Month Refund: If you sell your original home within 36 months of buying the new one, you can usually claim a refund of that 5% surcharge.

4. Capital Gains Tax (CGT): Losing Your Relief

While you live in your home, it is exempt from Capital Gains Tax thanks to Private Residence Relief (PRR). However, the moment you move out and rent it, that exemption starts to “tarnish.”

When you eventually sell the property:

You get relief for the years you lived there as your main home.
You get relief for the final 9 months of ownership, even if you weren’t living there.
The remaining period (the rental years) is taxable.

The Rate: In 2026, CGT on residential property is 18% for basic rate taxpayers and 24% for higher rate taxpayers.

5. Don’t Forget the “Consent to Let”

Technically not a tax, but a legal must: You must notify your mortgage lender. Renting out a property on a standard residential mortgage without Consent to Let is a breach of contract. Lenders may increase your interest rate or demand immediate repayment if they find out via HMRC data sharing.

6. How the Let Property Campaign Can Help

If you moved in with a partner years ago and haven’t declared the rent, the Let Property Campaign (LPC) is your best solution. It allows “Accidental Landlords” to come forward voluntarily.

Lower Penalties: Because the mistake was likely an oversight (Careless) rather than a deliberate attempt to cheat, we can often negotiate 0% or very low penalties.
Catching Up: We can help you file for multiple years at once, ensuring you are fully compliant before you buy your next home together.

Frequently Asked Questions (FAQs)

Q1: My partner and I aren’t married. How does that affect the tax?

If the property is in your name only, the income is 100% yours for tax purposes. If you own it jointly, the income is usually split 50/50. Being unmarried means you can’t use “Form 17” to shift income to the lower-earner as easily as married couples can.

Q2: Can I deduct the cost of the new furniture I bought for the tenants?

No. You cannot deduct the initial cost of furniture. However, you can claim Replacement of Domestic Items Relief when you eventually replace those items (like a broken sofa or fridge).

Q3: What if my rental income doesn’t cover my mortgage?

You may still owe tax. Because you can’t deduct the full mortgage payment (only the interest, and only as a 20% credit), you can have a “taxable profit” even if your bank account shows a loss each month.

Q4: Does HMRC really know if I’m renting out my old flat?

Yes. HMRC’s “Connect” system tracks Land Registry changes and matches them against the electoral roll and Tenancy Deposit Schemes. If you are registered to vote at your partner’s house but still own your old flat, a “nudge letter” is often inevitable.

Q5: I only plan to rent it for a year. Do I still need to tell HMRC?

Yes. There is no minimum time limit. If you earn over £1,000 in a tax year, it must be reported.

Don’t Let Your “New Start” Be Ruined by Old Tax

Moving in together should be an exciting time, not a source of future legal stress. If you’ve recently become an accidental landlord, let Felix Accountants review your numbers and handle the HMRC registration for you.

Get an Accidental Landlord Tax Review

News

The Non-Resident Landlord Guide: How Overseas Owners Can Use the LPC

Post author By Nelson
Post date February 6, 2026

Living abroad doesn’t mean you’re out of reach for HM Revenue & Customs (HMRC). In fact, in 2026, the digital trail left by overseas landlords is easier than ever for the UK tax office to follow. Whether you’re a UK expat working in Dubai, a retiree in Spain, or a foreign investor, if you receive income from a UK property, you generally owe UK tax. Expat Tax Rules

Many overseas landlords mistakenly believe that because they pay tax in their country of residence, or because their UK letting agent deducts tax at source, they have no further obligations. At Felix Accountants, we specialize in the Non-Resident Landlord Scheme (NRLS) and helping overseas owners regularize their past through the Let Property Campaign (LPC).

1. What is the Non-Resident Landlord Scheme (NRLS)?

The NRLS is a tax regulation designed to ensure HMRC gets its cut of rental income from landlords whose “usual place of abode” is outside the UK (typically staying abroad for 6 months or more).

Under the scheme, there are two ways tax is collected:

Withholding at Source: Your letting agent (or your tenant, if they pay over £100/week) must deduct 20% basic rate tax from your rent and pay it directly to HMRC.
Gross Payment: You can apply to HMRC using Form NRL1 to receive your rent in full. If approved, you are responsible for paying the tax yourself via a Self Assessment tax return.

The Common Trap: Receiving rent “gross” does not mean the rent is tax-free. It simply means you’ve promised HMRC you will handle the paperwork yourself. If you receive rent gross but fail to file a return, you are in breach of the scheme.

2. Why Overseas Landlords are “High Risk” for HMRC

In 2026, HMRC’s Connect system is linked to global exchange agreements. HMRC now receives data from banks in over 100 countries. If you are transferring funds from a UK letting agent to an overseas account, or if you have a UK mortgage but a foreign address, the system flags you.

Common reasons overseas landlords fall behind:

Assuming the Letting Agent handles it: They only deduct 20%; they don’t file your personal tax return or claim your personal allowance.
Double Taxation Confusion: Thinking you only pay tax where you live. (Most treaties state property income is taxed first in the country where the property is located).
The “Mortgage Wash” Myth: Thinking that if the rent just covers the mortgage, there is no profit to declare.

3. How the Let Property Campaign Works for Expats

If you’ve realized you have years of undeclared UK income, the Let Property Campaign (LPC) is your best route to safety. It is open to non-resident individuals (but not companies or trusts).

The Advantage for Expats:

If you come forward voluntarily, we can often argue that being “out of the country” or “confused by international rules” constitutes Reasonable Care or a Non-Deliberate error.

By using the LPC, you can:

Secure lower penalties (often 0% to 20%).
Avoid a formal, intrusive tax enquiry that might look into your other global assets.
Clean up your UK record before you decide to sell the property or move back.

4. Capital Gains Tax: The “Exit” Trap

If you are an overseas landlord looking to sell your UK property in 2026, you face a strict Non-Resident Capital Gains Tax (NRCGT) regime.

You must report the sale to HMRC within 60 days of completion.
You must pay the tax within that same 60-day window.
The Problem: If your rental income history isn’t clean, HMRC may hold up the sale or use the sale notification to trigger an audit of the last 20 years of rent.

Using the Let Property Campaign before you list the property for sale is a vital strategic move.

5. Claiming Your Personal Allowance

Even as a non-resident, many people (including UK citizens and EEA nationals) are still entitled to the UK Personal Allowance (£12,571 in 2026).

If your UK rental profit is £10,000, and you have no other UK income, you owe £0 in tax.
However, you must still file a return to claim this allowance. If your agent has been deducting 20% tax, you can actually use your tax return to claim a refund of every penny they took.

6. How Felix Accountants Supports Global Landlords

Distance shouldn’t be a barrier to compliance. We offer a digital-first service for overseas clients:

Remote Consultation: Video calls in your time zone.
Digital Disclosure: We handle the entire LPC submission through HMRC’s Digital Disclosure Service.
NRL1 Applications: We help you apply to receive rent gross for the future.
Refund Management: If you’ve overpaid via withholding tax, we get your money back.

Frequently Asked Questions (FAQs)

Q1: I pay tax in the USA/Dubai/Australia. Do I still pay in the UK?

Yes. The UK has the “primary taxing right” on UK land. You pay the UK first. You can then usually claim a “Foreign Tax Credit” in your home country so you don’t pay twice on the same money.

Q2: My tenant pays me directly into my UK bank account. Does HMRC know?

Highly likely. In 2026, banks share “suspicious activity” reports and data on large regular transfers with HMRC. Furthermore, the Land Registry records show you own the house but aren’t living there.

Q3: Can I use the LPC if I own the property through a BVI or Jersey company?

No. The Let Property Campaign is for individuals only. Non-resident companies must use a different disclosure route and are subject to UK Corporation Tax.

Q4: I haven’t lived in the UK for 10 years. How far back will they look?

If the failure to disclose was “Careless,” they look back 6 years. If they deem it “Deliberate” (because you knew the rules but ignored them), they can go back 20 years.

Q5: Will using the LPC affect my immigration status or visa?

Usually, no. HMRC is a separate department from the Home Office. In fact, having “clean” tax affairs is often a requirement for many visa renewals and citizenship applications.

Protect Your UK Investment from Abroad

Don’t let an administrative oversight in the UK turn into a global legal headache. Whether you owe tax or are due a refund, Felix Accountants will bridge the gap between you and HMRC.

Book a Global Expat Consultation

News

Joint Ownership Tax: Why Both Owners Must Disclose Separately to HMRC

Post author By Nelson
Post date February 6, 2026

Joint Ownership Tax_ Why Both Owners Must Disclose Separately to HMRC - visual selection

One of the most common reasons landlords fail a tax audit is a misunderstanding of how Joint Tax Ownership. Many couples assume that if the rent goes into a joint bank account, or if one partner manages the property, only one tax return is needed.

In 2026, HMRC’s “Connect” system is specifically designed to flag properties with multiple owners where only one (or neither) is declaring income. At Felix Accountants, we frequently handle cases where a husband and wife are both pursued for back-tax because they didn’t realize that joint ownership requires dual disclosures.

1. The “50/50 Rule” for Married Couples

If you are married or in a civil partnership and living together, HMRC applies a strict “default” rule: Rental income is split 50/50 for tax purposes.

It does not matter if:

One of you earned all the money to buy the house.
The rent is paid into only one person’s bank account.
One of you does all the “work” of being a landlord.

Unless you have a specific legal agreement (see Form 17 below), HMRC will expect each of you to declare exactly 50% of the profit on your own individual tax returns.

2. The “Separate Disclosure” Requirement

This is the part that catches most people out during the Let Property Campaign (LPC). If a husband and wife have undeclared income from a jointly owned property:

You cannot make one joint disclosure.
Each person must notify HMRC separately.
Each person will receive their own unique Disclosure Reference Number (DRN).
Each person must submit their own 90-day calculation showing their share of the income.

The Risk: If only the husband discloses and the wife doesn’t, HMRC will accept the husband’s money but then open a separate investigation into the wife for her 50% share—often with higher “prompted” penalties.

3. Changing the Split: Form 17 and Deeds of Trust

Sometimes, it is more tax-efficient for the lower-earning partner to receive more of the income. For example, if the wife is a basic-rate taxpayer and the husband is a higher-rate taxpayer, you might want a 90/10 split in her favor.

To do this legally in 2026, you must:

Have a Deed of Trust: A solicitor must draft a document showing you own the property in unequal shares (as “Tenants in Common”).
Submit Form 17: You must notify HMRC of this unequal split within 60 days of signing the deed.

Important Note for LPC: You cannot backdate a Form 17. If you are disclosing for the last 6 years and you only just signed a Deed of Trust, you must still disclose the previous years on a 50/50 basis. You can only use the new split for the future.

4. Unmarried Joint Owners (Friends, Siblings, Partners)

If you own a property with someone you are not married to, the rules are different:

You are generally taxed according to your actual ownership share (e.g., if you own 70% of the house, you pay tax on 70% of the rent).
You can agree to a different split of profits and losses, but it must reflect the reality of your agreement and be supported by evidence.
Just like married couples, both of you must file separate tax returns or LPC disclosures.

5. The “Personal Allowance” Strategy

Joint ownership is often a powerful tool for reducing your total tax bill.

Example: A property makes £20,000 profit. If only one person owns it and they are a higher-rate taxpayer, they pay £8,000 in tax.
If a married couple owns it 50/50, they each have £10,000 profit. If neither has other income, that £10,000 falls within their Personal Allowance (£12,571), and the total tax bill is £0.

This is why HMRC is so aggressive in checking that both parties are declaring; the “missing” 50% often represents a significant amount of lost tax revenue for the government.

6. How Felix Accountants Manages Joint Disclosures

When a couple comes to us with a joint property issue, we provide a coordinated service:

Mirror-Image Disclosures: We prepare both disclosures simultaneously to ensure the figures match perfectly (HMRC will flag any discrepancies).
Penalty Mitigation: We argue that since you are disclosing as a household, you are showing maximum cooperation, which helps keep penalties for both partners at the minimum.
Future-Proofing: We help you decide if a Form 17 election is right for you moving forward to keep your future tax bills as low as possible.

Joint Tax Disclosure

Frequently Asked Questions (FAQs)

Q1: My husband is the only one on the mortgage, but we both own the house. Who pays the tax?

Tax follows beneficial ownership, not necessarily the mortgage. If you have a legal document showing you both own the property, you both must declare the income. If only one person is on the title deeds, that person is usually 100% responsible unless a “Trust” exists.

Q2: We have a joint bank account where the rent goes. Is that enough for HMRC?

No. A joint bank account is not proof of a joint tax liability. HMRC looks at the legal and beneficial ownership of the property itself.

Q3: Can one of us pay the full tax bill for both of us?

No. HMRC treats you as two separate taxpayers. You must each pay your own share of tax, interest, and penalties from your own (or joint) funds under your own reference numbers.

Q4: What if my partner refuses to disclose?

This is a difficult situation. You should still make your 50% disclosure to protect yourself. This prevents you from being charged with “Deliberate” concealment, even if your partner remains non-compliant.

Q5: If we sell the house, do we both pay Capital Gains Tax (CGT)?

Yes. Each owner has their own CGT Annual Exempt Amount. By owning the property jointly, you can effectively double your tax-free allowance when you sell.

Double the Owners, Double the Care

Joint ownership is a great way to share the rewards of property investment, but it comes with dual responsibilities. If you and your co-owner haven’t been filing separate returns, Felix Accountants can help you both get back on track together.

Book a Joint Property Consultation

Articles Articles Blogs Guides

The 90-Day Clock: How to Prepare Your Documentation for an LPC Submission

Post author By Nelson
Post date February 5, 2026

1. The Timeline: Notification to Settlement

The LPC is a structured process. Missing the 90-day deadline can result in HMRC rejecting your disclosure and opening a formal (and much more expensive) enquiry.

Day 1: Formal Notification via the Digital Disclosure Service (DDS).
Day 2–60: The “Deep Dive.” This is when we reconstruct your rental accounts.
Day 60–80: We calculate the “Tax Gap,” statutory interest, and the behavior-based penalty.
Day 80–90: Formal submission of the disclosure and payment of the total amount.

2. Essential Documentation Checklist

To make an accurate disclosure, we need to move beyond “estimates” wherever possible. You should begin gathering:

Income Records: Tenancy agreements, letting agent annual statements, or bank statements showing rent deposits.
Expense Evidence: Invoices for repairs, insurance certificates, management fee statements, and utility bills for void periods.
Mortgage Data: Annual mortgage interest certificates (usually provided by your lender every January).
Other Income Info: Your P60 or P11D (if employed) or self-employed accounts. Your rental tax is determined by your total income, so we need the full picture to apply the correct tax bands.

3. Dealing with Missing Records

What if you don’t have bank statements from six years ago?

Bank Requests: Most banks can provide historic statements for a small fee, though this can take 2–3 weeks (hence the urgency).
Reasonable Estimates: If records are truly lost, HMRC allows for “Best Estimates.” We can use local rental market data and average maintenance costs for your property type to build a defensible set of figures.
The Narrative: We must include a note in your disclosure explaining why records are missing and how we reached our estimates.

4. Calculating the “Add-Ons”: Interest and Penalties

Your disclosure isn’t just about the tax. HMRC expects you to “Self-Assess” two other figures:

Statutory Interest

The Penalty Offer

You must make a “Formal Offer” of a penalty. As discussed in previous articles, this is based on your behavior:

Reasonable Care: 0%
Careless (Unprompted): 0% – 30%
Deliberate (Unprompted): 20% – 70%

5. Making the “Formal Offer”

A unique feature of the LPC is that it is a Contractual Disclosure. When we submit the form, we are making a “Formal Offer” to pay a specific amount. If HMRC accepts this offer, it becomes a legally binding contract that prevents them from re-opening those specific years in the future (provided your disclosure was honest).

6. What If You Can’t Pay Everything on Day 90?

If the final bill is larger than expected, do not wait until Day 90 to tell HMRC. * We can negotiate a “Time to Pay” (TTP) arrangement.

HMRC is generally more open to payment plans (spreading the cost over 6–12 months) if the request is made as part of a voluntary disclosure.

Frequently Asked Questions (FAQs)

Can I submit the disclosure before the LPC 90 days are up?

Yes. You can submit as soon as your figures are ready. In fact, submitting early reduces the amount of statutory interest you have to pay.

What happens if I miss the LPC 90-day deadline?

HMRC may remove you from the campaign. This means you lose the “favourable terms” and lower penalties. They may then open a formal enquiry into your affairs.

Does HMRC check every single LPC disclosure?

Do I need to send my LPC receipts to HMRC with the disclosure?

No. You don’t send the receipts with the form, but you must keep them for 6 years after the disclosure. HMRC can ask to see your “working papers” at any time during that period.

Can Felix Accountants handle the LPC payment for me?

Beat the LPC Clock with Felix Accountants

The LPC 90-day window is the final hurdle to tax peace of mind. Let Felix Accountants take the lead on the calculations and the paperwork, so you can focus on the future of your property investment.

[Button: Start My 90-Day Disclosure Process] [Button: Get a Quote for LPC Management]

Read our other blog post by clicking here.