As of April 2020, landlords and those selling second homes must declare and pay any capital gains tax due, within 30 days.
HMRC revealed that thousands of landlords have incurred fines for failing to pay the tax within the 30-day window. Latest figures from April 2020 to January 2021 show that 51,300 capital gains tax returns were filed, of these returns 16,800 were late.
The OTS have said the large number of people missing the deadline is a cause for concern and the 30-day window was “ambitious”. It also added how it was “virtually impossible” for taxpayers to calculate their tax bills in that short amount of time. This may have resulted in some people guessing the amount they need to pay, whilst others may still be unaware of the new rule.
The OTS have called on the government to consider changing the deadline to 60 days and/or making it mandatory for conveyancers and estate agents to alert their clients of their capital gains tax obligations.
Under the old rules, taxpayers declared and paid the tax owed in annual tax returns, often months after they had sold their properties.
Taxpayers have reportedly incurred more than £1 million in late filing penalties, with the new 30-day deadline expected to bring in £1.2 billion in additional tax revenues by 2023.
According to the OTS, it would cost HMRC £105 million if the window were to be extended to 60 days and £210 million if it were to be extended to 90 days. However, the OTS added the cost would drop in subsequent years and that the overall intake would be the same, it would just take longer to receive the payments.
HMRC have said they are not looking to make money from fines, they do however, want taxpayers to pay the tax owed on time.
At STS (Europe) we can assist with the completion and submission of capital gains tax returns on UK property.
If you require assistance with your capital gains tax liabilities, contact us via our contact page, give us a call on 01704 891676 or email email@example.com