HMRC letter about Airbnb, lodger or rental income you didn't declare?
An HMRC 'nudge letter' about property income is a prompt to check your position, not a final tax demand. Before assuming you owe anything, check the allowances. There is a £1,000 property allowance, and the Rent a Room scheme can exempt a chunk of income from letting a furnished room in your own home. If you do have income to declare, coming forward voluntarily generally results in lower penalties than being caught, and you should respond by the date the letter states even if your answer is that you owe nothing.
Written by the team behind Agent Arthur, our HMRC and tax specialist. This guide is general information about UK law, reviewed for accuracy.Why you got the letter
HMRC increasingly receives data from platforms like Airbnb and from other sources, and sends 'nudge letters' to people it believes may have undeclared property income. Receiving one is unsettling, but it is a prompt to check your position, not a final tax demand.
Check the allowances before assuming you owe
Before assuming you owe anything, check the allowances. There is a £1,000 property allowance: if your total property income for the year is under £1,000, you generally do not need to report it. Separately, the Rent a Room scheme can exempt a chunk of income from letting a furnished room in your own home each tax year. Depending on which applies, some or all of your income may not be taxable, or may reduce what you owe.
If you do have income to declare
If, after checking, you do have income to declare, the best move is to come forward rather than wait. HMRC operates disclosure facilities for exactly this, and voluntary, cooperative disclosure generally results in lower penalties than being caught after ignoring a letter. Penalties for undeclared income are influenced by whether the failure was careless or deliberate, and by how helpful you are, so cooperation genuinely counts in your favour.
Whatever your conclusion, respond to the letter by the date it states, usually within 30 days, even if your answer is that you owe nothing. Ignoring it tends to escalate matters and removes the goodwill that voluntary disclosure earns. Gather your records first, meaning dates, amounts received, and any allowable expenses, so your response is accurate.
Reply within the deadline, the right wayArthur drafts a clear reply that either shows your income fell within the allowances, or makes a tidy voluntary disclosure. That turns a worrying letter into a closed matter.£5 launch price (normally from £19.99)Start my appeal letterCommon questions
Does a nudge letter mean I definitely owe tax?
No. It is a prompt to check your position, not a final tax demand. HMRC receives data from platforms like Airbnb and sends these letters to people it believes may have undeclared property income, but after checking the allowances, some recipients owe nothing.
What is the £1,000 property allowance?
If your total property income for the year is under £1,000, you generally do not need to report it. Above that, some or all of your income may still be reduced by the allowance depending on your circumstances.
What is the Rent a Room scheme?
It can exempt a chunk of income from letting a furnished room in your own home each tax year. Depending on whether it or the property allowance applies, some or all of your income may not be taxable, or may reduce what you owe.
Should I reply even if I think I owe nothing?
Yes. Respond by the date the letter states, usually within 30 days, even if your answer is that you owe nothing. Ignoring it tends to escalate matters and removes the goodwill that voluntary disclosure earns.
Is it better to come forward if I should have declared?
Yes. HMRC operates disclosure facilities for exactly this, and voluntary, cooperative disclosure generally results in lower penalties than being caught after ignoring a letter. Penalties are influenced by whether the failure was careless or deliberate and by how helpful you are.