£256m Capital Gains Tax raised from underreported second home sales amid enhanced compliance checks

HMRC has intensified its compliance efforts, targeting property sellers who underreport capital gains on disposal of second homes, with over 10,000 individuals flagged for underpayment in the last tax year. The crackdown, which has led to the highest number of compliance checks in five years has yielded £256 million in recovered Capital Gains Tax (CGT) for 2024–25. This is a 41% increase from the £182 million collected in 2023–24, according to analysis by international law firm BCLP.

Despite a post-pandemic boom in property transactions, CGT recoveries had stagnated around £180 million annually since COVID-19. The number of CGT compliance checks surged from 7,769 in 2023–24 to 10,063 in 2024–25.

The rise in checks, reflects HMRC’s renewed focus on closing the £47 billion tax gap and boosting revenue through targeted enforcement, with increased staffing and use of data analytics, including HMRC Connect system. The Connect system’s data is forever expanding and has been used by HMRC staff to target non-compliant taxpayers. As HMRC continues to scale its operations, experts warn that taxpayers should ensure their filings are accurate and complete.

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