By Daniel Hunter
People who have sold properties that are not their main homes and who have not told HMRC about the profits they have made are facing penalty letters from the taxman under a new campaign.
Buy to let landlords and second home owners are being targeted in HMRC’s Property Sales Campaign aimed at those selling homes in the UK or abroad, where Capital Gains Tax (CGT) has not been paid on profits made. This includes properties people have sold that were given to them and the sale of holiday homes.
“CGT is applicable when a property, which is not a main home, is sold at a profit that tops the annual CGT allowance, which is currently £10,600," Stephen Barratt, Private Client Tax Director at accountants and business advisers James Cowper explained.
"HMRC may dig back into the records and many ordinary people who were unaware of the rules could be in for an unpleasant surprise. There are reliefs available to reduce the tax on second homes but specific planning in advance is required.”
Owners have until 9 August to tell HMRC about any unpaid tax on property sales, and a further four weeks until 6 September to pay the tax owed. Those who disclose voluntarily will pay lower penalties.
"It is important that those affected seek professional advice because it is important that those preparing the calculations fully understand the complex rules and so ensure that the tax, and therefore any penalty and interest, are kept to a minimum," Stephen continued.
"For instance the tax bill might be considerably lower if the property has been let out as holiday accommodation as a means of funding its upkeep. HMRC will not fulfill this advisory role. It is equally important that those who have recently acquired a second home or are contemplating a sale of one take advice. Simple, early planning can often help minimise future tax bills."
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