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    Tag: second homes

    HMRC to remind second home sellers to pay CGT

    Posted on by Rebecca Campbell

    HMRC has begun writing to individuals who have recently sold a second home to remind them to file a property disposal return and pay capital gains tax (CGT) within 60 days of completion. HMRC will identify candidate receipts by using unspecified ‘real time information’.

    This follows recent confirmation from HMRC that a CGT property return must be submitted on the sale of a second home, even if a Self Assessment (SA) tax return has already declared the gain. In these situations, the CGT property return must be submitted using a paper return rather than via the online UK property account.

    The only exception is where the SA return is filed within 60 days of completion of the transaction, meaning the SA tax return is filed before the due date for the CGT UK property return. In this case, the CGT UK property return is not required. For example, if a property is disposed of on 25 March 2022, the gain was reported on the 5 April 2022 SA tax return, and it was submitted by 24 May 2022 (60 days from the 25 March 2022), then a CGT property return would not be required. Therefore, this exception is only going to apply in a limited number of cases.

    Taxpayers will be required to contact HMRC to obtain a paper return, which could result in missing the deadline. HMRC recently confirmed that 25,300 CGT UK property returns were submitted after the deadline in 2020/21 tax year, with a further 23,600 in the 2021/22 tax year.

    We will most likely begin to see a decline in the number of returns submitted late following the extension of the deadline from 30 days to 60 days for transactions completing after 27 October 2021. According to recent figures, 2,000 returns were submitted late in the quarter to 31 March 2022, compared to 7,4000 the year before.

    Get in touch

    The latest clarification by HMRC and the requirement to request a paper tax return could lead to further penalty pain for taxpayers. If you would like to discuss the new CGT reporting system in more detail or need help submitting a UK property return, avoiding costly penalties, get in touch with Jonathan Cunningham by clicking the button below.

    ‘Tax loophole’ on second homes to close from April 2023

    Posted on by Rebecca Campbell

    The government recently announced they are to close the ‘tax loophole’ which allows some owners of second homes to escape business rates and council tax.

    According to the government, the changes will target homeowners who leave properties empty whilst claiming they are a holiday let. The current rules allow owners of second homes in England to escape paying council tax and access small business rates relief by declaring an intention to let their property out to holidaymakers. Second homeowners can benefit from these tax breaks even if they never actually let their home.

    These new rules could impact owners of genuine holiday lets as they will now be required to meet strict letting criteria to qualify for the business rates relief.

    What are the new rules?

    Under the new rules, which are due to take effect from April 2023, a property will be assessed for small business rates relief, rather than council tax, if the owner can provide evidence that:

    • It will be available for letting commercially, as self-catering accommodation, for short periods totalling 140 days in the year;
    • During the previous year, it was available for letting commercially, as self-catering accommodation, for short periods totalling at least 140 days; and
    • During the previous year, it was actually let commercially, as self-catering accommodation, for short periods totalling at least 70 days.

    The government has confirmed that they will accept evidence such as the website/brochure used to advertise the property, letting details and receipts.

    Newly let properties

    It is important to note that there will be no change to the rules for newly available holiday lets – these will be liable for council tax for each day until the property has been available for 140 days and let out for 70 days. On the day that these two criteria are met – the property will qualify for a business rates assessment.

    Get in touch

    If you have a holiday let and are unsure of what the new rules mean for you or would like to discuss your specific situation in more detail, get in touch with Jonathan Cunningham by clicking the button below.