Buy to let and shared house landlords are being urged to tell HM Revenue and Customs about any unpaid tax in return for reduced fines and penalties.

HMRC is offering an amnesty to property investors who want to put their income tax and capital gains tax affairs in order.

The aim is to recover £500 million in ‘lost’ tax on buy to let property, houses in multiple occupations and holiday lets.

The Let Property Campaign will until March 2015 and will offer property investors lower penalty charges for confessing any transgressions.

Chief Secretary to the Treasury Danny Alexander claims 1.5 million landlords have failed to pay enough tax on rental profits 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 is encouraging landlords who do not understand property tax or who may have made mistakes in filing returns to come forward and recalculate their figures.

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.”