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How to Declare Undeclared Income

You must tell HMRC about undeclared Income Tax and other taxes to avoid a prosecution. This guide explains the process of declaring undeclared earnings (e.g. property rental or overseas income).

DECLARE UNPAID TAX: You should inform HM Revenue and Customs as soon as possible.

They will need to know if you have not already told them about money or income that you need to pay tax on.

Some of the common reasons why it could have happened include:

  • You may have failed to realise that you needed to tell HM Revenue and Customs about it.
  • You may have been unsure how to declare undeclared income to HMRC.
  • You may not have declare it because you were unable to pay the taxes.

Note: It is always best to contact HM Revenue and Customs first. They may be more favourable than if they find out about a case themselves.

Declaring Taxable Income to HMRC

There is no need to tell HMRC about income if the tax already got paid (e.g. salary or wages). Even so, it is not uncommon for employers to deduct a shortfall.

Always contact HMRC if you think more tax is due through employment or through a workplace pension.

HM Revenue and Customs will need to know if you earned other taxable income and failed to declare it in a Self Assessment tax return. There are several ways you could have earned this income, such as from:

Note: This kind of income can take you over the current Personal Allowance. If it does you would need to pay tax on it.

Declare Undeclared Income on a Tax Return

The process is easy if you have already registered for Self Assessment. You can make a voluntary tax declaration by correcting your tax return.

But, what happens if you do not usually send in a tax return? In this case, you can register for Self Assessment. You can then declare any income you have not paid tax on from the last four (4) years.

Note: If the disclosure is for more than one year you need to fill in a separate tax return for each of the years. After registration, you will receive a letter that explains what to do next.

Registering for Other Taxes

There may be situations or circumstances where you must register to pay other forms of taxation, including:

Note: Contact HMRC if you have any questions about undeclared income for Corporation Tax, PAYE, or VAT.

Reporting Your Overseas Income to HMRC

Your residence status in the United Kingdom affects what you may need to report as foreign income in your Self Assessment tax return. Failing to report it means you may need to pay (both):

  • The undeclared amount of tax.
  • A penalty which may be worth up to double the amount of tax that you owe.

Note: Giving false information about the amount of tax that you owe can result in a prosecution. But, if you tell HMRC about undeclared income without unreasonable delay, they may consider the case less ‘unfavourably’.

You can find out how to disclose and make payments for offshore investments and assets using the Worldwide Disclosure Facility.

Thus, you may qualify to tell HMRC about undeclared income through one of the ‘offshore disclosure facilities‘ if:

  • You have not yet told them about your foreign income.
  • You are paying an incorrect amount of tax.
  • You made an incorrect claim on a previous occasion.
  • You get behind with your taxes.

You may be ineligible to use an offshore disclosure facility. If this is the case, and you still have tax to declare, you should contact HM Revenue and Customs Offshore Co-ordination Unit.

HMRC Offshore Co-ordination Unit
Mail: [email protected]
Telephone: 03000 530 310
Monday to Friday: 9am to 4pm
Check a list of telephone rates.

Making a Voluntary Tax Disclosure to HMRC in the United Kingdom