HMRC's New Taskforce: What It Means for Landlords
In January 2026, HMRC launched a dedicated taskforce to target landlords who fail to declare rental income and capital gains tax (CGT). The initiative, announced via a government news story, forms part of a broader strategy to close the tax gap, which stood at £36 billion in 2024/25. The taskforce will use data from the Land Registry, letting agents, and platforms like Airbnb to identify undeclared income. Landlords who have not fully reported their rental profits or CGT liabilities face significant penalties, and HMRC is encouraging voluntary disclosure before enforcement action begins.
New Reporting Requirements for 2026
From 6 April 2026, all landlords with gross rental income above £10,000 must comply with Making Tax Digital (MTD) for Income Tax. This means keeping digital records and submitting quarterly updates to HMRC using compatible software. The threshold was previously £85,000, but the government lowered it to bring more landlords into the digital fold. From April 2026, landlords must report the disposal of UK residential property within 60 days of completion, a rule that already applies to CGT on property sales. HMRC is tightening enforcement of that 60-day deadline.
Making Tax Digital: What You Need to Do
MTD for Income Tax requires landlords to use property inventory software or other HMRC-recognised software to keep digital records of income and expenses. You must submit quarterly updates to HMRC by the 7th of the month following the end of each quarter, and a final declaration by 31 January after the tax year ends. If you use a letting agent, they may provide digital records, but you remain responsible for the accuracy of your submissions. HMRC has published a list of compatible software providers on its website.
Penalties for Non-Compliance
HMRC has increased penalties for late submission and late payment under MTD. For late submission, penalties are £100 for the first late submission, £200 for the second, and £400 for the third and subsequent. For late payment, interest is charged at the Bank of England base rate plus 2.5%. If HMRC suspects deliberate non-compliance, it can impose penalties of up to 100% of the tax due, and in severe cases, criminal prosecution. The taskforce will also target landlords who have failed to declare rental income from overseas properties or who have incorrectly claimed main residence relief.
Capital Gains Tax: Don't Get Caught Out
Capital gains tax on residential property disposals must be reported and paid within 60 days of completion. This applies to second homes, buy-to-let properties, and inherited properties. From April 2026, HMRC will require landlords to provide more detailed information about the property, including the date of acquisition, disposal proceeds, and allowable costs. If you fail to report and pay within 60 days, you will face penalties and interest. HMRC's taskforce will cross-reference Land Registry data with tax records to identify non-compliance.
How to Regularise Your Tax Affairs
If you have undeclared rental income or unpaid CGT, HMRC encourages voluntary disclosure through its Let Property Campaign. This campaign allows landlords to disclose unpaid tax and pay what they owe, often with reduced penalties. To take part, you must notify HMRC of your intention to disclose, then provide full details of your income and expenses. HMRC will calculate the tax due and any penalties. If you come forward voluntarily, you may avoid criminal prosecution and higher penalties. The campaign is open to landlords who have not declared rental income, including those with overseas properties.
Steps to Take Now
- Review your rental income and expenses for the past four years. HMRC can go back 20 years in cases of deliberate non-compliance.
- Ensure you are registered for Self Assessment and that you have declared all rental income.
- If you sold a property, check that you reported and paid CGT within 60 days.
- Sign up for MTD for Income Tax if your gross rental income exceeds £10,000.
- Consider using an AI inventory tool to keep accurate records of your property transactions and expenses.
- If you have undeclared tax, consider making a voluntary disclosure to HMRC.
The Role of Technology in Compliance
With MTD for Income Tax, landlords must keep digital records. Our property inventory platform can help you track income and expenses, generate reports, and submit updates to HMRC. Using AI-powered inventory software reduces the risk of errors and ensures you meet your obligations. HMRC recognises that many landlords use agents, but the responsibility for accurate reporting remains with you. Investing in the right software now can save you from penalties later.
What the Tax Bodies Say
The Chartered Institute of Taxation (CIOT) has welcomed the taskforce but warned that landlords need more clarity on MTD. In a 2026 briefing, CIOT noted that many landlords are unaware of the 60-day CGT reporting rule and the new MTD threshold. CIOT recommends that landlords seek professional advice and start preparing now. The NRLA has also urged HMRC to provide more guidance on digital record-keeping for landlords with multiple properties.
Ready to Simplify Your Tax Compliance?
Our property inventory CRM is designed to help landlords and agents manage properties, track income and expenses, and stay compliant with HMRC's requirements. With features like digital record-keeping, automated reports, and MTD integration, you can focus on growing your portfolio while we handle the paperwork. Book a demo today to see how our platform can streamline your tax reporting and reduce your risk of penalties.