Her Majesty’s Revenue and Customs has launched a crackdown on holiday home owners and landlords who are failing to declare capital gains profits.
The new campaign will target those selling properties overseas as well as in the UK, who have made a profit in excess of the capital gains threshold (CGT). The CGT currently stands at £10,600.
If profits rise above the CGT, tax is due on the remaining income.
As part of the campaign to get tax-owing property owners to come clean about their profits, the HMRC is giving people until the 9th of August 2013 to tell them about any undeclared income. Tax owned must then be paid by the 6th September 2013.
If owners do not come forward, the HMRC will use a number of tools at its disposal to identify those owing tax. It has access to a database of all properties sold that have required stamp duty land tax to be paid. It will then examine people’s tax records to determine if any tax has not been paid.
Landlords will also be targeted in the clampdown, by using local council information.
Many landlord building insurance customers will be aware, owning a second property is very appealing, but the process comes with much greater complexity as regards tax. Those who own properties both in the UK and abroad may also find themselves subject to two instances of CGT – one in each country.