Property investors are being urged to confess any unpaid tax by taking part in an amnesty on rental profits.
HM Revenue and Customs has launched the amnesty to claw back £500 million in lost tax from landlords letting buy to let homes, student shared houses and holiday properties.
The Let Property Campaign will run for 18 months and will offer discounted penalty charges to property investors who put their tax affairs in order.
The amnesty was disclosed by Chief Secretary to the Treasury Danny Alexander at the Liberal Democrat conference in Glasgow.
He told delegates that some 1.5 million landlords have not paid the full amount of tax they owe for letting homes and should “pay up or face the consequences”.
“Over the last decade rents have risen twice as fast as wages. Some landlords still failed to pay the right tax due on the rents they receive. I’m talking about landlords who own more than one property, who rent to students, people with holiday lets and those who let houses in multiple occupations,” he said.
“And it adds up to a staggering £500 million owing to the taxman. We want it back. So we’re launching a campaign with a simple message for the rogue minority of landlords. Pay up or face the consequences.”
HMRC explained the move was to help landlords who did not understand tax laws or made honest errors in submitting tax returns.
Marian Wilson, head of HMRC Campaigns, said: “All rent from letting out a buy to let home, house in multiple occupation or holiday home has to be declared for income tax purposes. Telling us is simple and straightforward.
“We appreciate some people will have made honest mistakes, and some may not be fully aware that the rent from a property is taxable, and that is why it always makes sense to talk to us so we can help. It is always cheaper to come forward voluntarily and pay the tax you owe, rather than wait for HMRC to come calling.”