HMRC’s clampdown on undeclared rental income has reached unprecedented levels — recovering £107 million from UK landlords in 2024/25, the highest figure on record and more than double what it collected just three years ago.
Using data cross-matched from Land Registry, letting agents and platforms such as Airbnb, HMRC’s Let Property Campaign is now one of the most aggressive enforcement efforts in its history. For landlords, that means declaring every penny of rental income is no longer optional.
But, according to Chris Roberts, Managing Director of the Capital Allowance Review Service, compliance doesn’t have to mean overpaying.
“HMRC’s crackdown is entirely justified — everyone must pay the tax they owe,” says Roberts. “But what many landlords don’t realise is that while they’re focusing on reporting every bit of income, they’re missing out on legitimate tax reliefs worth thousands. These allowances were created to encourage property investment and improvement — yet they’re massively underused.”
The biggest missed opportunity, Roberts says, lies in capital allowances — tax reliefs that let property owners deduct the cost of qualifying improvements and fixtures from taxable profits. Unlike everyday repair costs, capital allowances apply to long-term assets embedded in or used within the property.
Research suggests up to 90% of landlords fail to claim allowances they’re entitled to, leaving substantial sums unclaimed year after year.
“Capital allowances can apply to a wide range of features — from heating systems and wiring to fitted furniture and white goods,” Roberts explains. “When you upgrade a kitchen, fit new carpets, or replace a boiler, there’s usually a claim waiting to be made. And it’s not just for commercial property — residential landlords can often claim too.”
Crucially, these claims can be made retrospectively, meaning landlords can recover allowances from previous years — often leading to significant tax rebates.
Integral features: Electrical systems, lighting, heating and water systems, air conditioning, and lifts. Replacements or upgrades can qualify for annual relief of up to 18%.
Plant and machinery: Moveable equipment such as ovens, hobs, showers, and security systems. White goods supplied to tenants often qualify under the Annual Investment Allowance, offering 100% first-year relief.
Furnishings and fittings: Furniture, carpets, curtains and other items in furnished lets may also qualify, with replacement furniture relief available in many cases.
Energy-efficient upgrades: Solar panels, insulation, and heat pumps can all attract enhanced capital allowances, allowing immediate relief on green investments.
With EPC standards expected to tighten from E to C in the coming years, Roberts says the timing is ideal: “You have to make these improvements anyway, so claim the tax relief while you do. It can soften the financial blow considerably.”
Claiming capital allowances correctly requires detailed records, technical valuations and proper apportionment of purchase costs between land, buildings, and fixtures.
“HMRC scrutinises these claims carefully,” Roberts says. “You need accurate documentation and sometimes a professional survey to support your figures. But when done properly, the savings can be substantial.”
Specialist firms typically handle surveys, review invoices and purchase contracts, and prepare reports to support HMRC filings. For landlords with multiple properties or major refurbishments, Roberts says the return on professional advice “usually pays for itself many times over.”
HMRC’s Let Property Campaign still offers reduced penalties for voluntary disclosures, but once an investigation begins, the chance for leniency disappears. Roberts says that’s when professional advice becomes essential:
“The worst outcome is being caught for undeclared income while also missing out on allowances that could have reduced your bill. It’s adding insult to injury.”
He urges landlords to act now — both to ensure full compliance and to make sure they’re claiming every legitimate relief available.
“HMRC’s enforcement should be a wake-up call,” he says. “Compliance is non-negotiable, but that doesn’t mean paying more than you should. These reliefs aren’t loopholes — they’re government incentives designed to support property investment.
“Get your house in order with HMRC, declare what you must — but claim what you can. In a climate this tough, using every legal advantage isn’t just smart; it’s essential to survival.”
