The taxman has been writing to taxpayers it believes may be selling or have sold a property in the UK.
Known as a ‘nudge letter’, it is issued by HMRC where it has reason to believe that tax has been underpaid.
When you sell a property, which was not your main home throughout your ownership, or land, you may have to pay Capital Gains Tax (CGT).
Many people will not know that there is a time limit of 60 days for reporting and paying CGT.
What does the deadline involve?
Taxpayers have 60 days from the date of completion to report the sale and make the CGT payment on account to HMRC.
In August, HMRC sent letters to around 1,200 taxpayers to inform them they held information that showed they may have been either considering selling or had recently sold a UK residential property.
If subject to CGT, sellers are taxed on the gain, not the amount of money received.
For example, a property bought for £200,000 and sold later for £300,000, makes a gain of £100,000 (£300,000 minus £200,000).
Basic-rate taxpayers pay 18 per cent on gains they make when selling property, while higher and additional rate taxpayers pay 28 per cent.
Are there penalties for late filing?
Late filing penalties may be charged, together with interest on any unpaid tax.
HMRC regularly sends out nudge letters to taxpayers and their agents and in this case, advises people to use its UK Property Account for reporting.
The HMRC letter advises those who may be affected to:
It is always advisable to talk to an accountant before attempting to complete the UK Property Account to report any capital gain.
Do you need help with Capital Gains Tax matters? Please contact us today.