Unpaid tax on share sales

Unpaid tax on share sales

Taxpayers are being warned to pay tax on any sales of shares that they have left off self-assessment tax returns or face the risk of a HMRC enquiry.

HMRC has advised that it has analysed thousands of tax returns and identified people who have not paid capital gains tax on the sale of shares and will be giving them 60 days to respond to the latest letter campaign.

However, if you don’t respond to the letter, HMRC will open an enquiry into the taxpayer. Even if the taxpayer is confident that they do not owe any tax, they must write and tell HMRC why the gains are not due, and they do want a letter. We would suggest that you ensure that you have proof of posting.

HMRC is ‘reminding’ taxpayers that they must pay Capital Gains Tax (CGT) if their total chargeable gains from all disposals in a tax year are over the annual exempt amount.

For tax years 2020-21 to 2022-23, the annual exempt amount was £12,300 for individuals and personal representatives.

This was halved for the last tax year, running at £6,000 for 2023-24, and will be reduced to £3,000 for 2024-25.

The ‘total chargeable gain’ is normally the difference between what was paid for the shares and what they were sold for.

HMRC have stated: ‘If you make or made a loss, you may be able to use this to reduce the CGT due on other gains. If you have an agent (accountant who acts for you), HMRC will have sent them a copy of the letter. If you don’t have an agent that acts for you, you may wish to seek professional advice – so please get in touch.

Taxpayers can settle any outstanding tax – but if they fail to do so and HMRC carries out a compliance check in the future and finds that your tax return is not correct, penalties are likely to be charged.

HMRC also said that taxpayers could be charged penalties regardless of if they have failed to pay the correct tax. ‘We may also do this if you’ve not told us that you need to pay additional tax,’ HMRC have stressed at the end of the letter.

If you are unsure about whether you have paid the correct amount of tax for the sale of shares or any other part of your self-assessment, please contact us here at Kennedys Accounting and we will be pleased to assist.