Shorter Reads

Second home owners beware!

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Published 5 November 2020

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HMRC has recently stepped up its investigatory activity in two areas that might be relevant to second homeowners:

  • HMRC is intending to send thousands of “nudge” letters to individuals who it suspects may have sold taxable residential property in the tax year 2018/19 and not declared this on their tax return. It is likely that HMRC will identify these suspected sales by using data obtained from the UK Land Registry. The letters will ask individuals to consider whether they should have paid capital gains tax (CGT) on the sale. If CGT should have been paid, the letters will ask individuals to either amend their tax return, or use HMRC’s Digital Disclosure Service, to pay any CGT owed.
  • Airbnb UK has agreed to share data with HMRC on the rental income of Airbnb hosts in the UK in the tax years 2017/18 and 2018/19. If an Airbnb host has received over £1,000 in a year by letting out their second home, this rental income must be declared to HMRC. The Airbnb data will enable HMRC to identify hosts who have not complied with this requirement. Such hosts can expect HMRC to get in touch with them in the near future, but may want to pre-empt this by declaring the income now, in order to reduce potential non-compliance penalties.

If either of these matters is of concern to you, please feel free to get in touch.

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Shorter Reads

Second home owners beware!

Published 5 November 2020

Associated sectors / services

  • Private Wealth
  • Tax disputes & investigations

Authors

HMRC has recently stepped up its investigatory activity in two areas that might be relevant to second homeowners:

  • HMRC is intending to send thousands of “nudge” letters to individuals who it suspects may have sold taxable residential property in the tax year 2018/19 and not declared this on their tax return. It is likely that HMRC will identify these suspected sales by using data obtained from the UK Land Registry. The letters will ask individuals to consider whether they should have paid capital gains tax (CGT) on the sale. If CGT should have been paid, the letters will ask individuals to either amend their tax return, or use HMRC’s Digital Disclosure Service, to pay any CGT owed.
  • Airbnb UK has agreed to share data with HMRC on the rental income of Airbnb hosts in the UK in the tax years 2017/18 and 2018/19. If an Airbnb host has received over £1,000 in a year by letting out their second home, this rental income must be declared to HMRC. The Airbnb data will enable HMRC to identify hosts who have not complied with this requirement. Such hosts can expect HMRC to get in touch with them in the near future, but may want to pre-empt this by declaring the income now, in order to reduce potential non-compliance penalties.

If either of these matters is of concern to you, please feel free to get in touch.

Associated sectors / services

  • Private Wealth
  • Tax disputes & investigations

Authors

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