Second home sales targeted by HMRC

HM Revenue & Customs has launched a campaign to target those who sold second homes without declaring their profits to the taxman. 

Homeowners will have until 9th August to declare any unpaid tax and must pay what they owe by 6th September this year.  Those who come forward voluntarily to disclose their tax liability will face lower penalties than if HMRC approaches them first.

The Property Sales campaign is aimed at those selling homes both in the UK and abroad where Capital Gains Tax is liable.  The tax applies to any property that is not a main residence and includes holiday homes.

Whilst the sale of a main home is usually exempt from CGT, the campaign will target property investors and buy to let landlords as well as those with holiday homes. 

Head of HMRC Campaigns Marian Wilson said;

“Some people will not understand that selling a second home, a holiday home or property disposed of as a gift could attract Capital Gains Tax.  They need to look at our website or contact us…. It is better to come to us before we come to you.”

Last year a report by the English Housing Survey found that almost 2 million households in England owned a second home, declaring ownership of more than 3 million properties in total.

Over the last five years HMRC has initiated a series of similar campaigns to tackle tax evasion which have raised £547 million from voluntary disclosures. 

However, Gary Ashford from the Chartered Institute of Taxation commented;

“Rather than launching different targeted campaigns in rapid succession, HMRC should focus their efforts on a big national campaign open to all taxpayers whose tax affairs are not up to date.”

“We also wonder whether HMRC need to look at the current penalty regime to make sure they aren’t acting as a barrier to the whole area of campaigns.”

Roy-Chowdhury from the Association of Chartered Accountants (ACCA) also urged HMRC to ensure people were better informed of concessions saying;

“HMRC need to be very careful to operate with a light touch (as) there are situations where ordinary people will get caught.  For example when two people each with a property decide to get married and don’t realise there is a time limit of two years to elect a principal residence.”

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