Landlords across the UK were recently warned about the issues that surround the private rented sector and the sale of secondary homes for profit, when the HM Revenue and Customs (HMRC) announced an amnesty to allow people to pay capital gains tax that they had not when they were supposed to.
This levy is due to the government when anyone sells a home which is not designated as their primary dwelling and makes a gain on their initial spend. It is a common charge for landlord insurance customers to face, but HMRC recently announced that many had failed to do so in years gone by.
And now, with the end of the amnesty drawing nearer, the Association of Residential Letting Agents (Arla) has announced that many will soon be receiving warning letters through their doors to inform them about the issue further and let them know of any incoming penalty charge.
Arla said landlords have until August 9th to check their obligations and ensure that they have admitted all that they are due to the HMRC. From there, they will have a further four weeks to make the transfer of funds and avoid a potentially financially crippling penalty.
Stephen Barratt, private client tax director at James Cowper, advised that the potential for large fines shows that all individuals who have sold a second home at any time look at their finances to make sure they have not been caught out.
It is thought that HMRC have the ability to look back over a number of years to make sure they catch all of those who have avoided the charge in the past, which could leave many facing a nasty surprise.
He added that they should "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.
"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."