Navigating HMRC’s Property Sector Focus

HMRC has intensified its focus on the property sector through legislative tax changes and enhanced access to detailed information. As part of its ongoing 'nudge letter' campaign, HMRC has targeted estate agents, landlords, and offshore companies to remind them of their reporting requirements, particularly concerning ATED filings.

This indicates HMRC's recognition of potential tax losses within the industry, prompting its intervention. Additionally, HMRC has issued data holder notices to property letting companies, demanding information about properties and landlords.

The government has also updated property tax legislation, reflecting its sustained interest in this area. Key changes include adjustments to Stamp Duty Land Tax (SDLT): the first-time buyers' relief threshold will decrease from £425k to £300k in April 2025, with properties over £300k attracting SDLT on the excess up to £500k at 5%. The maximum property value for first-time buyers' relief will also drop from £625k to £500k. A new 2% SDLT rate will apply to residential property purchases between £125,001 and £250,000 from April 2025, adding approximately £2,500 to most purchases unless First Time Buyers' Relief applies.

From 31 October 2024, SDLT for additional residential properties has increased from 3% to 5%, with similar changes for companies and non-natural persons, and the single rate for properties over £500,000 has risen from 15% to 17%. The Furnished Holiday Lettings (FHL) regime will be abolished from 1 April 2025, removing various tax benefits. Anti-forestalling provisions were introduced on 6 March 2024 to prevent tax advantages through conditional contracts.

Taxpayers receiving nudge letters or identifying issues should seek professional advice immediately to avoid higher penalties. Voluntary disclosure to HMRC, particularly through the 'Let Property Campaign', is recommended to rectify errors and achieve a clean slate. HaysMac offers extensive experience in handling disclosures, helping clients mitigate penalties and move forward positively.

To learn more, click here or contact the private client team at privateclient&trusts@haysmac.com.

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