Andy Burnham has indicated support for increasing Capital Gains Tax (CGT) rates to align with Income Tax levels, a move that could see rates rise from 24% to 45%. The proposal, framed as a fairness measure, has prompted concerns from business brokers and property sector professionals about potential economic impacts.
Implications for property businesses
Business sales broker Adam Walker, who has worked in the property sector for more than 35 years, outlined the potential impact on letting agency owners. He cited the example of a letting agency manager earning £100,000 annually who might consider starting their own business.
According to Walker’s analysis, independent letting agents typically operate on profit margins of no more than 15%. For a business with £1 million turnover, this would generate £150,000 annually for the owner, representing £50,000 more than the salaried position but requiring personal guarantees on bank loans and premises leases.
The increased CGT rate could affect decisions by property professionals considering business ownership, particularly as consolidation continues in the agency sector. Walker argued that if CGT rates do not reflect business risks, potential entrepreneurs may choose to remain employees rather than start their own operations.
Behavioural responses to tax changes
Walker highlighted that unlike salaried income, business owners and investors can typically control the timing of capital gains realisation. He noted that significant numbers of business owners completed sales before the November 2025 budget and again before the end of the 2025-26 tax year in April 2026.
This behavioural pattern, according to Walker, suggests that higher CGT rates may not generate additional revenue if owners simply defer sales indefinitely. He stated that the Government would collect “45% of ‘nothing'” if rates discourage asset disposals.
The timing of asset sales has broader implications for the property market, where transaction activity has already shown signs of constraint.
Inflation adjustment concerns
Walker also raised the issue of inflation’s impact on capital gains calculations. He argued that a substantial portion of CGT liability often results from inflation rather than real gains, and suggested this should be deducted before tax is applied.
The debate over CGT rates was extensively discussed in 2024 before previous tax changes, though Walker suggested those arguments have not been fully considered in current policy discussions.
Burnham has previously ruled out scrapping stamp duty, indicating selective approaches to property taxation reform. Walker expressed hope that the Government would review existing research on CGT before implementing further rate increases.
