Tax probes into landlords netted a record £107m by HMRC in 2024/25, more than double the amount clawed back by the custom’s body three years ago.  

The data comes from accountants Price Bailey, following a Freedom of Information request and is part of the Let Property Campaign, launched in 2013/14. 

The numbers from the accountant highlight how HMRC is increasing its take from undisclosed revenues from buy-to-let owners. 

This year’s figure just tops the £106.1m retrieved from landlords in 2023/24, but is much higher than the £65.4m the customs body clawed back in 2022/23, and more than double the £39.9m it gathered in 2021/22. 

HMRC recovered £13,713 in tax per disclosure in 2024/25, up 44% from £9,505 a year ago.

Price Bailey says: “These numbers make it clear that HMRC will be able to identify thousands more undisclosed landlords every year for many years to come.  

“While landlords are often making little or no economic profit, they often genuinely fail to realise that they have taxable profits to disclose.” 

The accountant adds that the data is made up of voluntary disclosures under the Let Property Campaign, and other compliance-related activities, such as HMRC’s non-responder and discovery assessment work. 

Price Bailey tax investigations partner Andrew Park says: “We’ve assisted large numbers of landlords in making voluntary disclosures over the last few years – typically, after they’ve received an HMRC nudge letter.” 

“They are often accidental landlords who kept a property after moving to cohabit with a new partner, inherited a property or temporarily moved abroad.  

“Many are not financially sophisticated or in receipt of high levels of other income, haven’t properly understood their responsibilities and haven’t previously sought advice.” 

The tax partner adds that it is “very easy” for some of the UK’s 2.2 million landlords to become caught in a ‘phantom profit’ tax trap. 

Park says: “Since the phased withdrawal of mortgage interest relief, landlords have faced a fundamental mismatch between economic and taxable profit.  

“Many landlords now appear profitable on paper, but only because tax law ignores the full cost of debt servicing.  

“This creates a ‘phantom profit’ effect — landlords owe tax on income they never truly received, pushing them into arrears or triggering compliance failures.” 

The accountant points out that recent and upcoming tax changes are likely to further complicate compliance for residential property investors. 

These cover: 

• The introduction of Making Tax Digital for income tax will require landlords to make quarterly submissions via HMRC-compliant software from April 2026 

• The reduction in the annual capital gains tax exemption, which was cut to £3,000 from April 2024. The higher capital gains tax rates, which apply to disposals after October 2024 — 18% for basic-rate, 24% to 28% for higher-rate taxpayers — will mean that more landlords will face this levy when selling property 

• Many landlords have shifted to limited company structures to preserve mortgage interest deductibility, but corporation tax now ranges from 19% to 25%, depending on profit levels, which makes tax planning more complex, especially around how profits are extracted, such as whether BTL owners pay themselves in dividends or through a salary 

Park says: “There is widespread confusion about the different tax treatment of capital expenditure and revenue expenditure.  

“Capital expenditure, such as installing a significantly upgraded kitchen, is not deductible against letting income, whereas repair and maintenance of an existing kitchen or a like-for-like replacement is deductible. 

“That distinction can be grey around the edges and trips a lot of landlords up.” 

He adds that a mixture of “more frequent reporting, reduced allowances and the growing complexity of relief rules” make tax rules more complicated for landlords.  

However, landlord tax rises that go back almost a decade have weakened their power in the housing market and have benefitted first-time buyers by adding more than one million homes to the housing market, according to a study by the Joseph Rowntree Foundation earlier this month.