Home owners who haven't paid capital gains tax (CGT) from the sale of their second homes could face a penalty of 30 to 100 per cent of overdue tax - or even a prison sentence - if it is not declared by Friday reported the Daily Telegraph today (6th August, 2013).
Taxpayers who come forward by the deadline then have until September 6 to pay. Those who do declare any unpaid tax will be charged a penalty of 10 to 20 per cent of overdue tax.
HM Revenue & Customs have sent letters to 35,000 taxpayers during the past month who had not yet registered to pay CGT from the sale of a second home, holiday home or buy-to-let property. The Revenue will target anyone who hasn't paid tax going back as far as 20 years.
Property which is the owner's main residence is free of capital gains tax. But other property falls within the CGT net, including those abroad.
The Telegraph reports that almost 1.6 million people have a second home in England and Wales, with 820,000 owning a second property abroad, according to the 2011 consensus.
CGT is charged at 18pc for basic-rate tax payers and 28pc for people in the higher and top-rate income tax bands.
Marian Wilson, head of HMRC campaigns, said: “Some people will not understand that selling a second home, a holiday home or a property disposed of as a gift could attract capital gains tax. They need to look at our website or contact us.
"It is better to come to us before we come to you.”
The CGT campaign by HMRC, which began in March, is also targeting those who rent out a second property and have so far failed to pay income tax on the rent.
Buy-to-let investors have faced stricter tax rules from a HMRC special task force in recent months to clamp down on the sector.
Edited and adapted from an article by Sophie Christie in The Telegraph, 6th August, 2013.