HMRC has warned that individuals who have sold properties which are not their main homes, and have not informed the tax authority about any profit, have just one month left in which they can make use of the disclosure opportunity. HMRC’s Property Sales Campaign is aimed at those selling second homes in the UK or abroad where Capital Gains Tax (CGT) should be paid and includes properties that were rented out and holiday homes.
Taxpayers have until 9 August to tell HMRC about any unpaid tax on such property sales, and until 6 September to pay the tax that they owe. By using the campaign to come forward voluntarily, people will receive the best possible terms, and any penalty will be lower than if HMRC approaches them first. People do not have to be concerned about the sale of their main home (or private residence) as this is usually exempt from capital gains tax. This exemption may not apply, however, when it has not been their only home or main residence for some time, or they have used it for business, including letting the property, or they have sold part of the garden. Campaigns have so far raised £547m from voluntary disclosures, and nearly £140m from follow-up activity, including 20,000 completed investigations.
Marian Wilson, head of HMRC Campaigns, said that over the last few months, hundreds of individuals have come forward with details of their second property sales.
‘If you have sold a second home you might not know it could attract Capital Gains Tax. If anyone has done this in the past and is unsure, they should look at HMRC’s website and use our simple decision tree to find out if they might owe CGT. Telling HMRC about your tax liabilities is straightforward, and help, advice and support are available,’
After 6 September, HMRC will take a much closer look at the tax affairs of people who have sold properties other than their main home, but who appear to have paid no CGT. The tax authority intends to use information that it holds about property sales in the UK – and abroad – to identify people who have not paid what they owe.
HMRC holds the database for all property disposals attracting Stamp Duty Land Tax. Once the campaign disclosure period closes, HMRC will compare this data with people’s tax records to establish whether they have told HMRC about the sale or disposal of second and holiday homes. Penalties – or even criminal prosecution – could follow.