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Increasing capital gains tax would ‘have a detrimental impact on supply’

Increasing capital gains tax would almost certainly have an adverse impact on the private rented sector, according to NAEA Propertymark and ARLA Propertymark. 

In a letter to the Office of Tax Simplification, Rishi Sunak asked for advice on “opportunities to simplify” the levy and make it “fit for purpose”.

Capitals gains tax is currently charged at 28% on the sale of second homes and buy-to-let properties. 

Almost 300,000 people paid capital gains tax in 2017-18, generating almost £60bn for the Exchequer.

Mark Hayward, chief executive, NAEA Propertymark and David Cox, chief executive, ARLA Propertymark, said in a joint statement: “The government need to tread with care with the review into the capital gains tax system and all consequences, whether expected or unexpected, need to be considered. 

“If the review includes allowances too, which would be sensible, then as with the recent stamp duty changes, taking people out of the tax equation should be an aim too. 

“Increasing rates further for investment properties could reduce appetite from landlords who provide vital housing to the private rented sector, which will have a detrimental impact on supply.”

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