I haven't declared my rental income, what should I do?

If you have rental income that has never been reported, the priority is finding out how far back it goes and how much profit was involved, rather than worrying first about penalties. Once you know the scope, the Let Property Campaign gives a clear route to put things right.

Coming forward voluntarily, before any letter arrives, matters enormously to the eventual cost. HMRC's penalty rules reward genuine unprompted disclosure with a far lower percentage than the same error found after HMRC makes contact.

Rental profit is chargeable to income tax under the property income rules, and needs reporting through Self Assessment for any year where net profit and other conditions require a return. Where returns were never filed, HMRC's discovery and assessment powers under the Taxes Management Act 1970 allow it to go back and collect tax it should have received.

The behaviour classification you give each year — reasonable care, careless, or deliberate — affects both the assessment time limit and the penalty percentage under Schedule 24 Finance Act 2007. Genuinely not realising rental income needed declaring is often treated as careless rather than deliberate, but this depends on the facts of your case.

Because the Let Property Campaign is a form of voluntary disclosure, disclosing before HMRC approaches you about this specific issue keeps you in the unprompted penalty band, which can be as low as no penalty at all for reasonable care errors put right without unreasonable delay.

If the undeclared property is held in your own name rather than through your company, this is a personal Self Assessment matter and does not directly affect your company's corporation tax position, although it can prompt HMRC to look more broadly.

Where rental income was mistakenly reported as company income, or vice versa, that mismatch needs sorting out as part of the disclosure, since HMRC will expect consistency between the personal and company positions.

You will owe the tax that should have been paid, interest running from when it was originally due, and a penalty set within the Schedule 24 range for your behaviour and prompting category. Multiple years of undeclared income can add up, so an accurate calculation matters.

Professional help calculating profit across several years, and handling the disclosure itself, is usually proportionate given the penalty savings from getting the classification and figures right. See /fees for our services and included tax investigation insurance.

Do not disclose only the most recent year if earlier years also had rental income. Partial disclosure is treated less favourably once HMRC discovers the gap.

Avoid guessing figures without any supporting evidence. Reasonable, clearly labelled estimates are acceptable where records are genuinely missing, but should be a last resort.

Do not wait to see whether HMRC notices. Land Registry, tenancy deposit and letting agent data-matching runs continuously, and every year of delay adds interest and risk.