HMRC cracks down on B2L investors
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 has not been paid.
This includes properties people have sold that were given to them and the sale of holiday homes.
Stephen Barratt, private client tax director at James Cowper, said: “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.
“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 until 6 September to pay any tax owed. Those who disclose voluntarily will pay lower penalties.
Barratt said: “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.
“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 fulfil 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.”