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Warning over Capital Gains Tax on buy to let sales

A business consultancy is warning that buy to let sellers in the current market are likely to be squeezed - and may end up paying more Capital Gains Tax than they expected. 

The Hargreaves Lansdown consultancy says house price rises averaging over 10 per cent annually according to multiple indices, matched with a freeze on the CGT threshold, means that buy to let investors achieving a liability of more than £12,300 in a single year, will pay tax. 

Hargreaves Lansdown says this is actually just one of many ways that individuals are likely to be paying more tax from next month.


The others are the much-publicised rise in National Insurance; the effective increase in income tax payments because of frozen thresholds; a rise in divided tax; increasing council tax; higher stamp duty on house purchases because of capital appreciation; and finally an effective rise in inheritance tax because of a freeze on allowances. 


Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says: “This April, just as we’re reeling from horrendous price rises, the taxman will wade in to deliver another terrible blow. It’s not just the horrible National Insurance hike and the miserable dividend tax rise, there are actually eight ways we’ll pay more tax, so it’s worth taking steps to ensure we don’t end up paying more than our fair share.

“The amount of tax we pay almost doubled between 2001/2 and 2019/20. 

|It fell back during the pandemic, but January figures show it bouncing back with a vengeance. Unfortunately, this is just the beginning: the new tax year will see taxes soar, as we inch towards the highest tax burden since the 1950s. It means we need to understand where the tax pressure will come from, and how to protect ourselves.”

  • Roger  Mellie

    Why would you sell, ever? So, 1). A landlord is not taxed on debt, so draw down some equity thats sitting in the property. A property investment is like a savings account. And 2). Landlords should have transitioned through an LLP to an LTD so if they have to sell they pay less tax as it's a dividend.

    James The Surveyor

    What does work for Jeff Bezos and Elon Musk doesn't always work for small landlords. Interest rates are rising and a combination of high, partly taxed mortgage interest with your proposed increased borrowings could lead to a negative cashflow.

    Furthermore, whilst you advocate for not selling, the CGT increases could mean you are in negative equity even if you are borrowing at an otherwise sensible LTV ratio.

    Theodor Cable

    Not many people on here lately......
    Almost a ghost town.
    Any reason why?

  • Paul Singleton

    They’re only paying more tax because they’ve made more money. Where’s the problem?


    That isn't remotely what the article said, or remotely what is happening. Re-read it with your eyes open and you might not be so ignorant.


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