HMRC reveals record hauls of capital gains tax
15th January 2015 | News
HM Revenue and Customs (HMRC) has confirmed its crackdown on buy-to-let landlords has resulted in a surge in capital gains tax receipts.
The failures of owners of buy-to-let property to declare gains and pay the appropriate tax owed are believed to be behind the heightened tax investigations.
Recent figures obtained by a firm of accountants demonstrate HMRC’s tax inspectors recouped £136m as a result of probes into underpayments of capital gains tax during the 2013-14 tax year; representing a 24 per cent increase in unpaid tax retrieved.
A spokesman for HMRC said: “Our enquiries are extremely effective as these figures show.”
The rise of property prices in the UK has fuelled increased profits for buy-to-let investors in recent times and there is a belief that thousands are still unaware that they have any capital gains tax due or are simply bending the rules and undervaluing their capital gains.
Less than 500,000 taxpayers are registered with HMRC as owning a second property, but the tax authority estimates that the true number of second property landlords is more like 1.5 million and fully intends to close the net on those keeping quiet.
In the main, capital gains tax receipts has grown strongly over the last few years. Latest figures from the Office for Budget Responsibility (OBR) suggest the CGT take for 2012-13 was £3.9bn but this is expected to rise to £6.7bn in 2015-16 and reach upwards of £9bn in the 2018-19 tax year.
David Lawrenson, of lettingfocus.com, believes it is harder than ever for landlords to limit capital gains tax.
“Under previous tax regimes landlords had taper relief and other reliefs which took some account of inflation,” said Lawrenson.
“There are no reliefs available now that take inflation into account.”