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TODAY'S OTHER NEWS

Capital Gains Tax review may spell bad news for buy to let

Chancellor Rishi Sunak has requested a review of Capital Gains Tax rules from the Office for Tax Simplification - leading to speculation it may be the start of higher CGT on buy to let investments. 

The OTS has published an online survey and a "call for evidence" to seek views regarding CGT, with the consultation closing on October 20. 

This would mean new CGT rules, taking into consideration the consultation, could be presented at the autumn Budget expected in November.

According to the Treasury the consultation aims to "hear directly from individuals and businesses" as well as "professional advisers and representative bodies" about which aspects of capital gains tax are "particularly complex and hard to get right, and to hear any suggestions for improvements”.

Recently the influential Institute for Public Policy Research think tank called on government to tighten CGT on buy to let properties and second homes.

CGT has traditionally been lower on investment properties and other activities because they involve risk-taking, while heavier taxed income from employment and savings interest reflect their much lower risk. 

However, CGT is already 10 per cent higher for the sale of buy to lets and second homes - at 18 per cent and 28 per cent for basic and higher rate taxpayers - than it is for investments.

In April HMRC changed its rules requiring UK residents to submit CGT returns, as well as pay any CGT due, within 30 days of completion of the sale of residential property - typically an additional home.

Previously, individuals under self-assessment could instead report the sale and pay across their liability through their next annual tax return.

  • Suzy OShea

    under the smoke screen of pretending to simplify the system, all they want to do is raise CGT.

    This is another attack on private landlords and will make more sell up sooner, exacerbating the already slumping property market, which Sunak hopes to save by a short stamp duty holiday of eight months. Dream on!

    Barry X

    agreed..... it won't be long before there's some sort of BTL / 2nd HOMES "CGT SURCHARGE".... its been threatened for long enough.

    One of the sad things is that since the days of Cameron, the "Tory" party have been steadily transforming themselves into a sort of "New Labour" (while "real" Labour moved further to the left). The Tories did this because - like most politicians - they are just unprincipled opportunists. They saw the way the world was going and rather than make a stand and/or attempt to do something about it (as well as differentiate themselves) they instead chose to make "Social Justice". Social Justice is of course a vague, undefined and totally nebulous piece of b***s*** that many people think they "believe" in without knowing what it means - because it doesn't actually mean anything!

    Meanwhile, the whole country has been allowed for all those years to become more and more left-wing, muddled, screwed-up, anti-business - unless left-wing fantasies like "renewable energy" or related to "carbon" or "climate".... and of course necessarily very anti-landlord.

    Best to get out if you can., and before they invent even more tax to take everything from us!

    About 15 years ago I came across a strange case of a man who was on the run and in hiding in Spain because he'd committed a tax fraud BUT ironically had LOST money doing it!!! It makes me think of all the landlords (like us) who have taken risks and worked so damned hard for so many years (over two decades as LLs in our case) only to be made to LOSE money for all our hard work and the contributions we've made to help so many people along the way.

     
  • Paul Barrett

    @barryx

    Yes indeed so correct.
    Many LL are just about viable.
    They hang on in there so as to hopefully achieve CG over a reasonable period.
    If this CGT increase occurs as appears to be most likely then little point in LL retaining their rental properties if there isn't any significant yield.

    Especially in the SE there are billions of CG wealth that can be taxed.
    Electorally taxing second homeowners and LL won't lose many votes.

    S24 while it has forced some LL out of the market hasn't been as effective as the Govt had hoped for.
    Increases in CGT would see many LL sell up.
    After all what is the point in struggling on thin yield to then find almost all your gains taken in tax.
    It simply disincentivises 2nd property ownership.

    There won't be much CG for the next 10 years.
    LL would be better off getting out now paying the current CGT even though that is painful.
    It will certainly be a lot less painful than what must be inevitably increased CGT on 2nd properties however used.
    There are billions of pounds of CG wealth in the SE.
    The Chancellor would love to get his hands on it now.
    LL in the SE are on borrowed time.
    Time to get out with current CG at existing tax levels.
    There is simply no way that yield in the next 10 years will match future CGT
    I intend to get out ASAP.
    Fortunately there seems to be plenty of newbie LL numpties willing to invest in the PRS.........more fool them.
    Hopefully that will make it easier for me to escape the PRS.

    No way would I invest now knowing what I know is happening and will be happening.

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