CGT hike of just 10% leaves B2L sector breathing a sigh of relief
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Buy-to-let investors escaped a hefty rise in Capital Gains Tax in last week’s emergency Budget, with chancellor George Osborne only increasing the levy by 10%.
CGT has gone up from 18% to 28% for higher rate taxpayers. The entrepreneurs’ relief rate of 10% on the first £2m of gains will be extended to the first £5m.
Andy Young, chief executive officer of The Business Mortgage Company, says the CGT rise is much lower than some had predicted, and it remains at 18% for low and middle earners.
He says: “Although the hike in CGT will be a disappointment to wealthier investors it is unlikely to have a significant affect on the buy-to-let market overall.
“Most residential property inves-tors are in the market for the medium to long term and seek returns through rental yields as well as capital gains.”
He adds: “The type of buyer most likely to be put off by the new CGT regime is the short-term property speculator looking to cash in on rising house prices.”
Stuart Law, chief executive of Assetz, says: “This change is not likely to have a significant effect on the property market because speculative investors are unlikely to sell their properties once the new tax rate comes into effect.
“Professional property investors generally look at the longer term benefits of ownership and understand the importance of regular income rather than short-term capital gain.”
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Readers' comments (2)
Anonymous | 29 Jun 2010 12:22 pm
"“Most residential property inves-tors are in the market for the medium to long term and seek returns through rental yields as well as capital gains.”
"
But yields are getting cut by the recalculation for the housing benefit from the median (50th percentile) of local rents, to the 30th percentile. Landlords I know are in cloud cuckoo land regarding this as "it won't affect" their rents as they "do not let to DSS".
CGT was the smokescreem; examine the cap and the recalculation of housing benefits and there is very little to cheer landlords.
Oh, and expect CGT and basic rate tax to rise next year.
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Anonymous | 30 Jun 2010 5:58 pm
Except the taxable element of the gain - that above the annual allowance - is added to any other income to establish the rate of CGT payable. This will put most landlords / BTL investors into the higher rate of CGT. There is a need for top slicing or indexation to be introduced to make this more equitable.
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