If HMRC Asks About Your Rental Income: What to Do

Why HMRC Is Contacting Landlords Right Now

If you have received a letter from HMRC asking about your rental income, you are not alone. HMRC has been issuing what it calls "nudge letters" to landlords across the UK this summer - prompting people to check their records and confirm their income is correctly reported. These are not formal investigations, but they do require a response, and ignoring one is a bad idea.

This post explains what is happening, why it is happening now, what HMRC expects to see, and how maintaining proper quarterly records makes the whole process much less stressful.

What Is a Rental Income Nudge Letter?

A nudge letter is a prompt from HMRC, not a full enquiry. HMRC sends these when its data - from Land Registry records, letting agent reports, and third-party sources - suggests a landlord may not be declaring all their rental income, or may not be filing at all.

The letter typically asks you to:

• Review your rental income for previous tax years
• Check that your tax returns are up to date
• Make a voluntary disclosure if anything is missing

Receiving one does not mean HMRC thinks you have done something wrong. It means your name appeared in a data set and HMRC wants to confirm things are correct. That said, how you respond matters.

What HMRC Expects You to Do

If you receive a nudge letter, HMRC will usually give you 30 days to respond. In some cases, this is extended, but do not rely on that.

Your response should confirm one of the following:

• Your rental income is already correctly declared on your tax return
• You need to amend a previous tax return to include rental income you missed
• You have rental income that has not been reported and you want to make a disclosure

If you are not sure which of these applies to you, speak to an accountant before responding. Getting this wrong can make things more complicated, not less.

If your records are in order, responding is straightforward. You confirm the income, reference the relevant tax years, and provide basic supporting information. The difficulty comes when your records are missing, incomplete, or disorganised.

What Records HMRC Expects Landlords to Keep

Whether or not you have received a nudge letter, HMRC expects all landlords to keep records that support what they have declared. For rental income, this typically includes:

• Rent receipts or bank statements showing rental income received
• Tenancy agreements for each property
• Invoices and receipts for allowable expenses such as repairs, letting agent fees, and insurance
• Records of any periods where the property was empty or not let
• Mortgage interest statements (where relevant under current rules)
• Evidence of capital improvements (these are not expenses but may affect capital gains)

HMRC expects you to keep these records for at least five years after the 31 January filing deadline for the relevant tax year. For income from property, the requirement can extend to six years if you are using the accruals basis.

For a more detailed breakdown of what HMRC looks for, see our post on HMRC Rental Income Enquiries: Records You Need to Keep.

The Difference Between a Nudge and a Formal Enquiry

A nudge letter and a formal Section 9A enquiry are not the same thing. A nudge letter is HMRC prompting you to check your affairs. A Section 9A enquiry is a formal investigation into a specific tax return, and it comes with legal obligations and strict timelines.

If you receive a formal enquiry notice rather than a nudge letter, you should get professional advice immediately. HMRC has 12 months from the date a tax return is filed to open a full enquiry, or longer if there has been deliberate underreporting.

Nudge letters often precede formal enquiries if there is no response. Responding promptly and accurately to a nudge is usually the quickest way to close the matter down.

Why This Is Happening Now

HMRC has been running a campaign targeting undeclared rental income for several years. Summer tends to be an active period for nudge letters because HMRC has processed tax returns from the previous January deadline and has had time to run its data-matching exercises.

The introduction of Making Tax Digital for Income Tax, which started on 6 April 2026 for landlords and sole traders with gross income over £50,000, has also sharpened HMRC's focus on property income. More digital data flowing into HMRC's systems makes it easier for them to spot discrepancies.

Discussions in landlord communities like PropertyTribes have confirmed that nudge letters are circulating widely this summer. If you have not received one but rent out property, it is still worth checking your records are in order.

For background on when and how MTD applies to you, see When Does MTD Start? The 6 April 2026 Deadline Explained.

How MTD Quarterly Records Make This Easier

One of the less-discussed benefits of Making Tax Digital is what it does for your records when HMRC comes asking questions. If you are already filing quarterly updates under MTD, you have a digital, timestamped record of your income and expenses for every quarter of the year. That is exactly what HMRC wants to see.

A quarterly update under MTD contains three things:

• Income - the gross rental income received in the quarter
• Expenses - allowable costs matched to that income
• Adjustments - such as prior period corrections or allowances claimed

When HMRC asks about your rental income, you can point directly to your filed quarterly updates. Each one was submitted digitally via HMRC-recognised software with a date stamp. That is a strong position to be in.

Landlords who are keeping records manually, in spreadsheets, or not at all, face a much harder task when a nudge letter arrives. Reconstructing income and expenses from bank statements and scraps of paper is time-consuming and stressful - and the results may still not be complete.

For more on what your quarterly updates should contain, see First MTD Q1 Filing: What Landlords Must Include (Property Income) and our post on After Your Q1 MTD Filing: Prepare Records for HMRC Enquiries.

What Good Records Look Like in Practice

You do not need a complicated system. You need a consistent one. Here is what that looks like for a straightforward buy-to-let landlord:

1. Record rent received each month as it arrives, matched to the relevant property
2. Log each expense at the point of payment, with the receipt stored digitally
3. Categorise each expense correctly - repairs, insurance, letting agent fees, and so on
4. Reconcile your records against your bank statement at the end of each quarter
5. File your quarterly update on time via your MTD software

Doing this consistently means that when HMRC sends a nudge letter, your response takes hours, not days. If you have been less organised, the post on Fixing Messy Expense Records Before August: A Q1 Reality Check is a good starting point for getting back on track.

Common Gaps That Trigger HMRC Attention

HMRC's data-matching is not perfect, but it is thorough. These are the most common reasons landlords end up receiving nudge letters:

• Undeclared rental income - particularly where a property was let informally, such as to family members or through holiday let platforms
• Income declared late - where a landlord started renting out a property but did not file a tax return until prompted
• Incorrect expenses - claiming capital improvements as repairs, or including personal costs in property expenses
• No record of empty periods - if a property appears in Land Registry data but no income is declared, HMRC may query it
• Multiple properties, partial declarations - where a landlord declared income from one property but not others

None of these automatically means penalties. But each one is easier to resolve if you can produce clear, accurate records quickly.

For guidance on what expenses you can legitimately claim, see Allowable Expenses for MTD: What You Can Claim as a Sole Trader or Landlord.

If You Have Undeclared Rental Income

If you receive a nudge letter and realise you have rental income that was not declared, the best thing to do is make a voluntary disclosure before HMRC escalates the matter.

HMRC's Let Property Campaign allows landlords to come forward, declare any undisclosed income, and pay the tax and interest owed. Penalties under the Let Property Campaign are generally lower than those imposed if HMRC uncovers the income itself.

You will need to calculate the rental income and allowable expenses for each relevant year. The further back you go, the harder this becomes without proper records - which is another reason why keeping good records from now on matters.

What Happens After You Respond

If your records are in order and you respond to the nudge letter promptly, most cases close without further action. HMRC confirms it is satisfied and moves on.

If there are discrepancies, HMRC may ask follow-up questions or open a formal check. In more serious cases, HMRC may issue a formal discovery assessment to recover underpaid tax from earlier years.

The timeline for a straightforward nudge response and closure is typically six to twelve weeks, assuming you respond within the initial 30-day window and your records are clear. Cases involving amended tax returns or voluntary disclosures can take longer, depending on the complexity and the years involved.

Preparing Now, Even If You Have Not Heard from HMRC

If you are a landlord who has not received a nudge letter, this is still a good moment to review your position. Ask yourself:

• Are all your properties declared on your tax return?
• Are your income and expense records complete for the last five years?
• Have you correctly categorised repairs versus capital improvements?
• If you are under MTD, are your quarterly updates filed and accurate?

If the answer to any of these is no, or you are not sure, it is worth addressing that before HMRC contacts you rather than after. For landlords now within the MTD regime, the quarterly update process helps with all of these by keeping records structured and current throughout the year.

Our complete guide at Making Tax Digital for Landlords: A Complete Guide to Quarterly Reporting covers the whole picture if you want to understand where your obligations stand.

It is also worth reading Q1 Record-Keeping: What HMRC Actually Needs to check your current records meet HMRC's standards.

Summary

HMRC nudge letters about rental income are common and increasing. They are not automatic penalties, but they do require a prompt, accurate response backed up by solid records. Landlords who keep proper records - whether through MTD quarterly updates or otherwise - are in the best position to respond quickly and close the matter without escalation. If you have undeclared income, the Let Property Campaign offers a structured route to coming forward on better terms than waiting for HMRC to act. And if your records are already in good order, a nudge letter is nothing more than an administrative task rather than a cause for concern.