We’ve had a surprising number of new clients come to us recently after receiving letters from HMRC about undeclared rental income.
And in almost every case, the business owner genuinely didn’t realise they needed to declare it.
The most common comment?
👉 “But I didn’t really make any money from it!”
Unfortunately, that doesn’t matter.
If you rent out a property you own, even for a short period, the income normally still needs to be declared to HMRC.
This includes things like:
✅ Renting out your home while working away
✅ Moving in with a partner temporarily and letting your house
✅ Short-term lets
✅ Airbnb income
✅ Furnished holiday lets
✅ Renting out a room
✅ Letting a property that “only covered the mortgage”
One recent client rented out his home for just 6 months while working in Saudi Arabia during 2023/24.
He assumed there was nothing to pay because the rent only just covered the mortgage.
HMRC have now caught up with it and he’s been charged:
❌ The unpaid tax
❌ Interest
❌ A penalty for failing to declare the income
And here’s the part many people don’t realise…
Your Mortgage Payment Is NOT Fully Tax Deductible
A lot of temporary landlords think:
“My mortgage is £1,200 and the rent is £1,200, so there’s no profit.”
But HMRC doesn’t work it out like that.
For residential property:
✅ Mortgage interest will generally receive limited tax relief
❌ The actual mortgage capital repayment is NOT an allowable expense
So even if the money coming in barely covers your monthly mortgage payment, you may still have taxable profit.
But How Did HMRC Know?
Honestly? We don’t always know exactly where the information comes from.
But HMRC now receives huge amounts of data from:
- Letting agents
• Land Registry
• Deposit protection schemes
• Online rental platforms
• Mortgage companies
• International data sharing
• Banking information
Their systems are becoming far more sophisticated every year.
The Important Bit…
If you’ve rented out a property, even briefly, don’t assume there’s nothing to declare.
Getting advice early is usually far cheaper (and far less stressful!) than dealing with HMRC letters and penalties later.
If you’re unsure whether something should be reported, just ask.
A quick conversation now can save a very expensive headache later.