16,000 landlords caught out by new capital gains tax rules

Thousands of landlords selling up amid the pandemic property boom have been hit with fines for missing a new 30-day tax window.

Since April 2020, anyone selling a second home must declare and pay any capital gains tax due within a month of completion or face penalties.

More than 16,000 people missed the deadline last year as property transactions soared, Telegraph Money has learnt.

HM Revenue & Customs said it had taken a lenient approach to fines, and that no one would be penalised for paying their taxes late until 2022. It also waived the standard £100 fine for declaring, or “filing”, taxes outside of the 30 days until June of last year.

But more than 13,000 people still received penalties for filing late outside of the three-month grace period, netting the tax authority more than £1.3m in six months.

Previously, landlords and secondhome owners declared any owing duties at the end of the year in their annual tax returns, giving them in some cases more than a year before they had to declare and pay. Chris

Etherington of RSM UK, a tax firm, said the move was part of “a massive sea change” in the way tax was to be collected in future.

“HMRC wants to bring in more tax more quickly. But it has an obligation to make taxpayers aware of what is going on. This is a very short period of time to sort everything out and we still find people are oblivious of the new time frame,” he said.

The change is expected to boost tax revenues by £1.2bn by 2023, according to official figures. Profits on second-home sales are taxed at a rate of up to 28pc, over the £ 12,300 annual exempt amount.

HMRC charges interest on tax not paid within the 30- day window until debts are cleared at a rate of 2.6pc. HMRC said the rules were announced in good time to allow people to prepare. It added that landlords could appeal against any fines and said it would consider coronavirus a reasonable excuse for late filing. An HMRC spokesman said: “Moving closer to real-time transactions helps ensure taxpayers still have money available to settle their bills.”