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Capital Gains Tax change could mean landlords pay LESS, not more

A leading housing market analyst suggests that the implementation of a Capital Gains Tax change could actually mean landlords paying less than they do under the current regime.

Lucian Cook, head of research at Savills, says in a blog that historically, back when CGT and income tax were the same level, there was a form of relief for inflationary gains - in other words, CGT was not applied on all profits, only those in excess of one of the standard measures for inflation.

Cook says that the recent report by the Office of Tax Simplification - the same report that has triggered concern about a CGT hike - actually suggested that, if the government is to reform the tax, it should also look at “reintroducing a form of relief for inflationary gains, that is, only tax the level of gain on an asset above and beyond general levels of inflation.”

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Cook goes on to say that any increase in CGT under the Office of Tax Simplification recommendations would be offset by a reduced taxable gain for most landlords who had bought since the start of the buy to let boom in the late 1990s and early 2000s. 

“In many cases, the tax payable could be less (not more) than under the current regime” he says, while advising landlords to consult their own landlords to see what any CGT change would mean for them.

Capital Gains Tax was introduced in 1965 and since then has been applied when additional homes have been sold. 

 

 

The recent OTS report - commissioned earlier this year by the Chancellor, Rishi Sunak - suggests the CGT and income tax should be more closely aligned, potentially increasing the rate of Capital Gains Tax from 28 per cent to 40 per cent or 45 per cent for a higher rate tax payer.

It also suggested reducing the annual tax free allowance from its current £12,300 to as little as £3,000 – meaning more of any gain would be taxed.

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    The Office of Tax Simplification means more tax that is the definition of it, never any other way or they wouldn't be doing it. The bigger tax payers that always paid more tax are targeted again and don't get any benefits from it, not even their Children's allowance, many even lose their personal allowance as well, as a penalty for paying more than their fair share of tax. He may even provide homes for lower tax payers / non payers to live-in, that get housing support, school food, school uniforms, nursery aid for their kids, reduced c/tax and a host of other discounts & benefits, as a reward for paying less or nothing, that's fine many businesses gone to the wall, just tax more out of business, what then ?.

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    Totally agree Michael. Things like housing support, school food, uniforms, nursery aid etc should be going to bigger tax payers. It is their money.

     
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