Here is another warning about buy-to-let investors who have sold up and not told the taxman about their profits. They can expect to receive penalty letters from HMRC.
Accountants James Cowper says the crackdown, part of HMRC’s Property Sales Campaign, will affect landlords and second-home owners who have sold properties in both the UK and abroad.
Stephen Barratt, private client tax director at James Cowper, said: “Capital Gains Tax 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 August 9 to tell HMRC about any unpaid tax on property sales, and a further four weeks until September 6 to pay the 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 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.”
Article courtesy of Landlord Today