HMRC, in 2024/25, won a record £107 million for landlords, more than double the amount that customary institutions seized three years ago.
The data comes from accountant Price Bailey, which follows a free information request and is part of the Let Property campaign launched in 2013/14.
Figures from accountants highlight how HMRC increases buyers’ income from unpublished revenue.
This year’s figure is only £106.1 million withdrawn from landlords in 2023/24, but is much higher than the £65.4 million for customs ships in 2022/23 and more than double the £39.9 million collected in 2021/22.
HMRC recovered £13,713 per disclosure in 2024/25, up 44% from £9,505 a year ago.
Price Bailey said: “These figures clearly show that HMRC will be able to identify thousands of undisclosed landlords each year for many years to come.
“While landlords often don’t have financial profits, they often don’t really realize they have taxable profits to disclose.”
The accountant added that the data consists of voluntary disclosures under Let Property activities and other compliance activities such as HMRC’s non-responders and finding assessment efforts.
“We have assisted a large number of landlords in voluntary disclosures over the past few years – usually after they receive an HMRC Nudge letter,” said Andrew Park, a tax investigation partner at Price Bailey.
“They are often unexpected landlords who live with new partners, inherit a property or own the property after temporarily moving abroad.
“Many people are not financially mature or receive high levels of other income, have not properly understood their responsibilities, and have not sought advice.”
The tax partners added that some of these 2.2 million landlords were caught in the “Phantom Profit” tax trap “very easy”.
“Since the phased withdrawal of mortgage interest relief, landlords face a fundamental mismatch between economic and taxable profits,” Parker said.
“Now, many landlords seem profitable on paper, but that’s simply because tax laws ignore the full cost of debt services.
“This has created the effect of ‘Phantom Profit’ – landlords should be taxed on income they never actually receive, pushing them to owed or triggering compliance failures.”
Accountants noted that recent and upcoming tax changes could complicate compliance by residential real estate investors.
- Introducing income tax figures will require landlords to submit quarterly through HMRC-compliant software starting April 2026
- From April 2024, the annual capital gains tax exemption will be reduced to £3,000. Higher capital gains tax rates apply to disposals beyond October 2024 – 18% of the base tax rate, 24% to 28% of high interest rate taxpayers, will mean more landlords face when selling such taxes when selling such real estate.
- Many landlords have moved to a limited corporate structure to maintain deductible interest on mortgage loans, but corporate taxes now range from 19% to 25%, depending on the profit level, which makes tax plans even more complex, especially around how profits are withdrawn, such as whether BTL owners pay their salaries in dividends or pay them through salary.
Parker said: “There are generally confusion about the different tax treatments of capital expenditure and income expenditure.
“Capital expenditures such as installing large amounts of upgraded kitchens are not deductible, rather than allowing revenue, while repairs and maintenance of existing kitchens or similar alternatives are deductible.
“This difference can be gray around the edges and trip a lot of landlords.”
He added that the mix of “more frequent reports, reducing the complexity of allowances and relief rules has been complicated by landlords.
However, according to a study by the Joseph Rowntree Foundation.
