Owning a second home can be a rewarding and occasionally lucrative experience, particularly if you are able to let your property at the same time.
However, selling a second home which is not your main residence can be a complicated affair as any accountant will tell you. There’s the question of Capital Gains tax to be considered, and for that you’ll need expert advice, particularly if you are looking to reduce the amount of chargeable gain on any transaction. So the latest advice from HMRC is important for second home owners, particularly those who have recently disposed of their properties. HMRC are advising that any property owners who have sold premises which are not their main homes, and have not yet informed the authorities about any profit made on the transaction, have just one month left to make use of an available disclosure opportunity.
HMRC’s Property Sales Campaign targets those selling second homes in the UK or abroad where Capital Gains Tax (CGT) should be paid.
This also includes properties that were rented out and holiday homes. Taxpayers have until August 9 to inform HMRC about any unpaid tax on such property sales, and until September 6 to pay the tax that they owe. Those who use the disclosure campaign voluntarily will be given the best possible repayment terms, and any penalty will be lower than if HMRC is forced to approach them.
Marian Wilson, head of HMRC Campaigns, said:
“Over the last few months we have published articles and written to a lot of people to make them aware of the campaign. As a result, hundreds of people have now come forward. It is not too late for people to contact us.”
“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 the September 6 deadline, HMRC will take a much closer look at the tax affairs of people who have sold properties which do not qualify as their primary place of residence. HMRC will use information it holds on property sales in the UK and abroad to identify people who have not paid what it believes they owe. This could lead to significant financial penalties and even criminal prosecution. Released figures suggest that HMRC campaigns have so far raised £547 million from voluntary disclosures, and nearly £140 million from follow-up activity, totalling around 20,000 completed investigations.
If you have recently sold a second home, then it is vital that you make contact with HMRC before the deadline to avoid any form of punitive sanction.
Steven Glicher accountants can make such an approach on your behalf and can give you expert advice on how you might be able to reduce the amount of any chargeable gain. For further information about CGT liabilities, EIS, SEIS, or EMI, contact Steven Glicher accountants on 0161 485 8007.