Taxman proposes new rent reporting obligations for lettings agents

HMRC has proposed modernising the way it collects rental income data from lettings agents.

A consultation hidden among the Autumn Budget documents this week revealed Government plans to improve property data reporting.

The consultation said HMRC continues to struggle to close the tax gap for property income, due in part to the fact that data can be “incomplete, difficult to match accurately to taxpayer records, and is often received too late to support timely compliance interventions.”

Under the current system, HMRC must issue a notice each time it requires information from a data holder such as a lettings agent or tenancy deposit scheme.

Any additional obligation to report property income directly to HMRC is likely to create further administrative pressures.”

HMRC says it currently issues more than 10,000 notices each year to obtain property income information.

To modernise the reporting framework, the Government now intends to introduce standardised digital reporting requirements and tools for both letting agent and tenancy deposit protection schemes.

Under the new framework, HMRC says information will be provided regularly without it having to issue individual notices for each reporting cycle, giving data holders greater certainty and supporting better business planning.

The taxman says a structured digital format, such as XML or JSON, will improve consistency in data formatting, automate validation and error checking and help find information more quickly.

Standards and obligations

The Government is consulting on the detailed design of the new obligations, including reporting frequency, the scope of information to be included, the standards that should apply to data quality and how data-holders can report the data after the end of the reporting period.

HMRC said in the consolation: “Improved data quality would enable HMRC to deliver better services for taxpayers while strengthening compliance activity. For example, HMRC could provide more personalised support for self assessment customers, automatically identify and register those who need to complete a return, and improve the accuracy of tax forecasts and compliance interventions.”

The consultation says the Government recognises that these reforms will create new obligations for a large and varied population of letting agents, including businesses that do not currently report to HMRC.

It says: “Through this consultation, the Government seeks views on how future requirements can be designed proportionately, with appropriate lead-in time, guidance, and support to ensure the proposals achieve their objectives while minimising new burdens.”

The consultation closes on 20th January 2027.

Unnecessary duplication

Commenting on the proposals, Timothy Douglas (pictured), Head of Policy and Campaigns at Propertymark, says: “Propertymark recognises the importance of accurate and timely tax reporting, but any new requirements must be proportionate, practical and properly considered.

“Letting agents already operate in a heavily regulated environment and are managing a growing range of compliance responsibilities. Any additional obligation to report property income directly to HMRC is likely to create further administrative pressures and costs.

“If these measures come to fruition, they must work alongside existing agency practice, avoid unnecessary duplication and be workable. We will be working closely with our members to respond to the consultation.”