Landlord tax is a hugely complicated area, so if you are investing in buy-to-let or renting out any property you own, it’s well worth consulting a specialist property tax adviser. They can help
ensure you:

a. Own, let, take income and realise gains from your investment in the most tax-efficient way for your circumstances, and
b. Pay the correct amount of tax to HMRC as and when required.

Failing to declare your income and gains correctly and therefore not paying enough tax on your profits can lead to fines and criminal prosecution, and it’s just not worth the risk.

In the 2024/25 tax year, compliance crackdowns by HMRC resulted in landlords paying a total of £107 million – that’s an average of over £13,500 each – in tax owed on undisclosed earnings. That was more than double the amount recovered just three years earlier.

Here are five of the most common things landlords fail to understand and do, that are most likely to lead to falling foul of HMRC:

1. Not taking professional advice. Ideally, you should seek advice before investing to ensure that your buy-to-let business, no matter how small, is set up in a tax-efficient way that ensures you meet your legal and tax obligations. You also want to ensure you don’t lose benefits or allowances that could make you worse off.