Capital Gains Tax

Prior to the recent budget there was a great deal of speculation about whether Capital Gains Tax (CGT) would be increased to the same level as income tax. As we now know, CGT was not increased on budget day, BUT before landlords and investors breathe a sigh of relief, it is worth noting that on 23rd March the Government intends to publish a range of tax consultations, which may well include changes to CGT.

I believe it is likely that CGT will be increased, but I also think that any increase is likely to be phased in over a period of time, in much the same way that higher rate tax relief on mortgage and finance interest for higher rate taxpayers was reduced over a four-year period. This will give people the chance to plan their tax affairs. As CGT is a tax on profit resulting from the sale of an asset there will be many people, landlords included, who may be at the end of their investment cycle and will be particularly concerned if CGT is increased. Some sort of phased approach is certainly the lesser of two evils when compared to an immediate increase.

Corporation Tax

I think all of us of are expecting to pay more tax in the years to come, but it will be interesting to see whether Rishi Sunak uses ‘tax day’ on 23rd March to completely overhaul some elements of our tax system. This is definitely a day to look out for if you are a landlord or an investor!

In the budget Rishi Sunak said he was keen to protect small businesses with profits of £50,000 or less. To do this he has created a Small Profit Rate (SPR) of Corporation Tax, which will allow them to remain at the current rate of 19%. He claims that around 70% of all companies (1.4 million businesses) will be completely unaffected by a change in Corporation Tax. As most landlords in the UK own less than two properties (on average 1.8 properties) they are unlikely to be affected.

Although companies with profits of less than £50,000 are protected from a further increase, businesses with profits of more than £250,000 will be taxed at 25%, with a taper in between these two levels of profits. This may impact some landlords who became incorporated to take advantage of the tax benefits of a limited company. It seems clear to me that it is the Government’s intention that companies will be asked to pay the greater share of the Covid expenditure. Indeed, it may ultimately be Sunak’s intention to increase corporation tax across all companies regardless of level of profit – but this is yet to be seen.

Property prices

It is clear that property price and rents are going to increase over the next 12 months and beyond. As far as house prices are concerned, property website Rightmove reported that on the day of the budget there was an immediate spike in activity, with the number of visitors surpassing 9 million for the first time. The previous record was 8.5 million. There were two reasons for the record numbers of viewings – firstly Sunak announced that the stamp duty holiday would be extended for a further three months and would then only be applied to properties over £250,000 for another three months. In addition, first time buyers buying a property under £500,000 will be exempt from paying stamp duty.

These changes to the stamp duty holiday will help any deal that may have otherwise fallen through, or that may be in the pipeline, as buyers now have a further three to six months to complete on the deal. It may also benefit a small number of new deals on properties that are worth less than £250,000 as long as they get the deal through by the final date of 30th September 2021. The average time it takes from a property first appearing on a property portal to eventually completing is currently six months. It is therefore unlikely that a new swathe of buyers will suddenly benefit from this tapering tax in stamp duty, although some of them certainly will.

The second reason for a spike in activity is the first-time buyer incentive of the return of the 95% mortgage. This, combined with the stamp duty extension, means there will be a cohort of new buyers over the new 12 months, and it is highly likely this will lead to increased prices in most areas of the UK outside of London.


I am a landlord myself, and my ears pricked up during the budget when Sunak and Johnson made it clear that they wanted to see generation rent become generation buy. This is an admirable goal for the many renters would like to become homeowners, however property stock is limited and there are around 13 million people renting in the UK, with many of them entirely happy to stay in the PRS for life.

Due to the constant shortage of properties being built and the Government’s assault on landlords over the last five years, I think it is likely that rents outside of London will increase by between 3-5% each year for the next two to three years.

In summary, if you are a landlord and you are in this for the long-term, not only will you see your assets increase in value, but you are also likely to receive healthier returns in the short to medium term.

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  1. Another hit at landlords this is a clear angle against land lords, along with other . Didnt do capital gains tax in budget, but is going to hit even harder on the 23rd.

    How much more can the private lord take ?
    From my college days I planned to work my cotton socks off,buy a portfolio and retire in my 40s/50s.

    I achieved this now with everything the goverment are doing against private landlords, I struggle to make a living.

    Look at the issue cant claim mortgage interest. The corporate land lord can claim his loan interest, so whats the difference ?

    Goverment wants renters to become mortgagees instead ?

    The positive ups for landlords you mentioned 3 to 5% rent increases, and property values go up ,? Great, but tenants struggle to pay now, also yes property prices up, but if capital gain tax comes in line with annual earning you will be worse off when selling.

    Cut long story short goverment needs to be taken to the house of Lords or court for private land lord discrimination. Ie business discrimination

    I believe you should be taxed on earnings, but the fact now we are taxed on our interest as well makes me sick. In my Oxford dictionary interest is a form of expense.

    How is taxed worked out ?

    Earning – expenses = tax amount to be taxed.

    Above is the tax system and it should be the same for everybody.

    The goverment sees landlords as a working person, and the rental is a bit on the side earnings. In alot of our cases wrong !!!!!!

    When I was renting in the 90s/2000 most tenants ok, you had the odd ones bunk on arears, but now the tenants have so many rights its unreal.

    What really makes me laugh legal to have list of bad landlords online but elegal to have list of bad tenants. Tenants know they can run up around 3 to 4k arears; clear off,and the landlords want chase as it will cost this to attempt to try, and may win and get 10 pounds a month.

    Almost forgot, the introduction of quarterly tax returns, plus a yearly. Every quarter get taxed ????? Heres an example do 3 quarterly returns, pay tax, out of blue large bill comes in ie new oil boiler 4k ? Wheres the money as ive been taxed 3 quarters so don’t have it. A quarterly return is totally stupid, and again being discriminating against the private landlord. The corporate landlord would be OK as not doing tax return till end of year. If all businesses done quarterly tax return, how could they expand or pay bills ????

    What other expenses will landlords not be able to claim next ?

    What new regs will be introduced ,?

    It wouldn’t surprise me next that the goverment introduce a rent reduction so tenants can heat the house, or because tenants have to cut the grass landlords have to cover time and lawnmower expenses. Lawnmower has to be kept in shed, so landlords have to supply, and as shed 5% size of house rents reduced by 5% to cover.

    I don’t want to do it, but I have put 50% of my portfolio on the market and may consider doing the rest.

      • I agree and it’s painful. I invested years in my two rental properties and it has cost me my health to know I may not have my pension income from it ..and I didn’t invest in a private pension scheme thinking I will have a good return on my investment from property.
        I also may sell to a wealthier Corporate Landlord 😳

    • I think you mean the renters have brought or are in effect your properties and probably with you getting a bank loan etc, renters have no rights at all, if you mean a section 21 with two months notice is a right yes ok but not ideal if you are the renter, if you have brought them from your earnings then you must be a very high earner, im not sure what rights you think are so great for renters, maybe you could enlighten me. In the current climate you will be fine, millions who have to rent from the PRS & as times go on you have the awful option to turning your houses into flat or HMO’s so your future will be fine, the renters not so

  2. Likewise 2 properties sold this year, 6 more to go and all because of landlord persecution. I might have even stomached the mortgage interest tax raid in anticipation of an overall capital gain however the landlord liability for tenants welfare ever increasing, the inevitability of licensing, the empty homes terrorising, the vilification of landlords by local authorities, quarterly tax returns on the horizon and capital gains tax increases inevitable , impossible energy C ratings to follow, inability to evict in a timely manner all mean that it is just too risky to be a landlord as well as too expensive. I make no money from rental in fact it probably costs me money as I cannot deduct mortgage interest and therefore effectively pay tax on costs at the higher rate as well as the costs themselves. I started my rental business 9 years ago as a btl retirement investment but I would have been much better off both financially and mentally if I had just put all my hard earned Paye taxed money into sips and isas. It is not worth the aggro and liability. COVID has simply put into stark relief the risk that landlords face , so I am selling up hopefully ahead of cgt increases and using proceeds to invest in simpler assets before the next land grab. My tenants will face huge rent increases when they try to rent other equivalent properties if they can find them. I have noticed that there is hardly anything for rent. Others will have to turn to the local authority. But I have had enough thanks entirely to govt policy . Maybe I was too good a landlord always repairing, renovating and never raising rents whilst tenant in situ. I put in 3 new boilers this year on demand whilst I myself have been waiting to afford a new one for 2 years. Good luck tenants but I can no longer afford to keep you. Local authorities you are welcome to embrace the social housing nirvana you have been seeking. Meanwhile another decent prs landlord bites the dust.

    • That’s exactly what I think . I have taken care of all my tenants for years ..and now I hate to think what they also have to suffer …The government plan is devastating for landlords and renters alike . They should have helped us maintain the properties and give us cheaper loans or grants if they want higher standards.
      .instead they choose to rip us off and ruin our livelihoods and the tenant pay higher rents to Corparate Landlords.The tenens are able to buy homes sold, but the richer landlords will.

      • thats ridiculous its a business like any other, you not only want rent you want grants to do them up and no doubt then put the rents up after the free grant, bonkers

  3. I agree with all the sentiments above, and yes Danielle it is time for legal action. Surely it is illegal to discriminate against and persecute anyone – so why should this government be able to do so, relentlessly, against PRS landlords for running a legitimate business?

    There is clear and undeniable proof, so it is a matter of discerning the right legal channel(s) and funding. With a class action this appears to me to be the only option as the government – particularly Jenrick and Sunak – are clearly determined to destroy PRS landlords, and this must stop.

    • Or perhaps the government could enact land price reforms and build home as they once did, freeing up landlords from the awful PRS as you see it and renters could rent affordable secure homes again, problem solved

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