A brown envelope lands on the doormat. Inside is a letter from HMRC saying it has information suggesting you may have rental income you haven't told them about, and asking you to check your tax position. It is not a fine, and it is not a formal investigation. But if you rent out a property and you receive one of these in 2026, ignoring it is the worst thing you can do.
TL;DR: HMRC is sending more "nudge" letters to landlords than ever, driven by platform data from Airbnb and similar sites. The letter is a prompt, not a penalty. If you owe tax on rental income, the safest route is a voluntary disclosure through the Let Property Campaign, which gives you 90 days to pay and keeps penalties lower than waiting for a formal enquiry.
Why Is HMRC Sending Landlords Nudge Letters in 2026?
Because it now has the data. Since 1 January 2024, digital platforms like Airbnb and Booking.com have been legally required to report seller income to HMRC, with the first reports covering the 2024 year due by 31 January 2025 (GOV.UK reporting rules for digital platforms, 2025).
That means HMRC is holding a full year of short-let earnings and cross-matching it against Self Assessment records. Where the numbers don't line up, its Connect system flags the taxpayer and a nudge letter follows. Land Registry records and tenancy deposit scheme data feed the same risk-scoring.
In our experience, most people who get one of these letters are not deliberate evaders. They are accidental landlords who inherited a property, moved in with a partner and let the old flat, or assumed a small profit wasn't worth reporting. The data doesn't distinguish, so the letter arrives anyway.
A Nudge Letter Is Not a Formal Enquiry
A nudge letter is a prompt, not a statutory enquiry. HMRC is giving you a chance to correct your position before it opens a formal compliance check, which carries higher penalties and more scrutiny.
Most of these letters include a document called a Certificate of Tax Position, which asks you to sign a declaration confirming your affairs are in order or setting out what you owe. There is no legal obligation to complete it, and signing it without advice is risky because it is a binding statement that can carry criminal consequences if wrong.
One question clients always ask is whether they can just bin the letter. You can't. HMRC follows up, and silence pushes a soft prompt towards a formal investigation. The better move is to work out your actual position first, then respond on your terms.
Do You Actually Owe Tax on Your Rental Income?
Maybe not. The first £1,000 of gross property income is covered by the property allowance and is tax-free, so if your total rental income for the year is at or below that, you usually have nothing to report (GOV.UK tax-free allowances on property income, 2026).
Above £1,000, you generally need to declare the income through Self Assessment and pay tax on the profit after allowable expenses. You can claim the £1,000 allowance or your actual costs, but not both. For most landlords with a mortgage and running costs, claiming actual expenses gives the lower bill.
There is a further change worth flagging. From 6 April 2026, landlords with qualifying income over £50,000 must keep digital records and file quarterly updates under Making Tax Digital for Income Tax (GOV.UK Making Tax Digital for Income Tax, 2026). Our MTD for Income Tax guide walks through who is caught and when the first update is due.
How Should You Respond to an HMRC Nudge Letter?
Work out whether tax is actually due before you reply. If your rental profit sat within allowances or you already declared it, a short written response confirming your position is often enough. If there is undeclared tax, the safest structured route is a voluntary disclosure through the Let Property Campaign.
What we see most often is people responding too fast, signing the certificate, and locking themselves into a figure they haven't checked. Take the time to add up the income and expenses for each year first.
A calm, evidenced response protects you. HMRC will usually extend the response window if you ask, because the letter is not a formal deadline. Keep copies of everything, and don't sign the Certificate of Tax Position until you know your numbers are right.
The Let Property Campaign, Step by Step
The Let Property Campaign is HMRC's disclosure facility for residential landlords with undeclared rental income. It has two stages. First you notify HMRC that you intend to disclose, and it issues a unique disclosure reference number. Then you have 90 days from that acknowledgement to calculate what you owe and pay it (GOV.UK Let Property Campaign guide, 2026).
Your disclosure needs to cover the tax, interest on late payment, and a penalty. You work out how many years to go back based on why the income went unreported, which is where professional help pays for itself.
The campaign is open to any residential landlord, including those with holiday lets or overseas property. It does not cover companies or commercial premises. If your let has already ended, our furnished holiday lets guide explains how the 2026 abolition of the FHL rules affects past and current lettings.
What Penalties Could You Face?
Less than you might fear, if you come forward first. Penalties are a percentage of the unpaid tax, and the percentage depends on your behaviour and whether the disclosure was prompted or unprompted. Careless errors attract lower penalties than deliberate ones, and coming forward before HMRC contacts you keeps the floor as low as possible.
For deliberate and concealed behaviour, penalties can reach up to 100% of the tax for UK income and 200% for offshore income (GOV.UK Let Property Campaign guide, 2026). Interest also runs on the late tax, and in the worst cases HMRC can pursue criminal prosecution.
The gap between a voluntary and a forced disclosure is real money. A landlord who discloses through the campaign typically pays a far smaller penalty than one HMRC catches after a formal enquiry, because the framework rewards prompt, complete cooperation. We break down how these charges build up in our guide to HMRC late payment penalties.
Frequently Asked Questions
Do I have to sign the Certificate of Tax Position?
No. There is no legal requirement to complete it. Because it is a binding declaration that can carry criminal consequences if inaccurate, most advisers suggest you do not sign it until you have checked your figures and, ideally, taken professional advice.
What happens if I ignore an HMRC nudge letter?
HMRC follows up. Silence signals that you are uncooperative and pushes the matter from a soft prompt towards a formal statutory enquiry, which carries higher penalties and, in serious cases, the risk of prosecution. Responding on your terms is always better than waiting.
How many years of rental income do I need to disclose?
It depends on why the income was not reported. If reasonable care was taken it is usually fewer years than for careless or deliberate omissions, where HMRC can go back further. The Let Property Campaign disclosure process helps you work out the correct number of years for your situation.
Is the Let Property Campaign still open in 2026?
Yes. It has been running since 2013 and remains open in 2026 with no announced closing date. It is the standard route for residential landlords who need to bring undeclared rental income up to date.
I only made a small profit. Do I still need to report it?
If your gross rental income is above the £1,000 property allowance, you generally need to declare it, even if the profit after expenses is small. Below £1,000 you usually do not need to tell HMRC. Check the gross figure, not the profit after costs.
Received a nudge letter, or worried one might be coming? Get in touch and we'll review your rental income position, work out what you actually owe, and handle a Let Property Campaign disclosure for you if one is needed. A quick check now is far cheaper than a formal enquiry later.