Chancellor Rishi Sunak has ordered a review of the Capital Gains Tax (CGT) system amid fears that he is to claw back some of the £188.7 billion the government has spent propping up the economy during the coronavirus pandemic sooner than expected.

The review by the Office for Tax Simplification (OTS) will not be good news for landlords, who are one of the key sources of CGT revenue for the government and who already pay up to 28% on gains from residential property.

One area the OTS may consider hammering include the CGT tax-free allowance that mitigate much of the impact of the tax on residential property gains, which is currently set at £12,300.

The chancellor is also likely to look closely at tax bands – depending on a property owner’s income, the level of CGT varies between 18% and 28%.

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According to a report in today’s Times newspaper, Sunak is looking at whether to raise ‘historically low’ CGT rates to match equivalent income tax rates, and raise £90 billon over the next five years.

But sources at the Treasury have said the review of CGT should not be read as an automatic plan to raise levels of CGT, although The Times notes that the move ‘will prompt speculation’ ahead of the Autumn budget announcement.

A tax hike would not be a surprise – the government is scheduled to spend in total £370 billion this year, and that in order to bring spending back down to 75% of GDP, £60 billion will have to be found every decade from tax raising or spending cuts for the foreseeable future.

But landlords can have their say. The OTS has already published an online survey and a call for evidence to seek views about Capital Gains Tax.

Read about the CGT rule changes that came in earlier this year.




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2 COMMENTS

  1. Landlords have had no support from the government during Covid.

    A number are locked into interest only mortgages and have seen the ability to claim mortgage interest relief being tapered down over the years.

    During Covid we’ve had to deal with shortfalls in rent whilst many being hit with licensing requirements introduced this year.

    Costs are up generally as a result, finding good tenants has become harder and paperwork and regs are ever increasing.

    What little advantage there was in terms of cashing out when you sold a property looks as if it’s being taken away too.

    Not all landlords are unscrupulous – the majority of us offer affordable housing and having resorted to hiking up rents.

    Hopefully the government will see sense – or if it does increase car rates it’ll be based on the level of gain being made.

  2. It must be obvious to even the most braindead LL that Sunak intends to screw LL over big-time.

    Expect CGT to substantially increase.

    Govt knows it can screw LL fir as much as it wants as it won’t affect electoral circumstances at all.
    Govt knows everyone loves to kick a LL.

    If LL have anything about them they will get out of the game especially those in the SE.

    It is in the SE where billions of CG lies in rental property.

    Sunak intends to get his hands on a substantial part of it.

    S24 was a Govt attempt to get rid of LL forcing them to realise CG and then having to pay CGT.

    With substantial CG in rental property in the SE LL would do well to sell up and pay the existing CGT as very soon that CGT will be substantially increasing.

    CG is highly unlikely to occur in the next 10 years.
    Property prices are going nowhere.

    Better to realise the CG now and pay current CGT levels.

    Now is the time to take property profits.
    CGT will only become more.

    It is clear Sunak intends to come for the private LL even more than Govt has to date.

    There is simply no way that yield will be as much as new increased CGT.

    Far better to take the profits now!

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