Relief for landlords as Capital Gains Tax left unchanged
The government didn’t make an announcement on Capital Gains Tax in the Budget, despite fears it would be hiked to 40% for higher rate taxpayers.
In January the Office for Tax Simplification recommended for CGT to be more closely aligned to income tax rates, in a review commissioned by Chancellor Rishi Sunak.
Michael Cook, national lettings managing director at LRG, said: “Today’s announcement regarding the Capital Gains Tax (CGT) is great news for the property sector, especially for lettings agents and their landlords, as they play a key role in maintaining a strong and thriving private rented sector.
“The increase in CGT would have dramatically reduced the supply of rental properties, and could have prompted a large number of landlords selling up in order to beat any CGT deadlines and thereby ousting tenants from their homes.
“It’s important that the government avoids implementing too many initiatives that disincentivise landlords from investing in the sector.
“If they do, they must simultaneously make provision for high-quality rental stock via alternative means, otherwise they risk increasing what is already a large demand and supply gap, and invariably increasing rents further.”
Andy Foote, director at SevenCapital, said: “Landlords and owners of second homes will also be breathing a sigh of relief at the news that capital gains tax will not be increased, contrary to rumours flying around prior to the Budget being revealed.
“This group of people have already weathered multiple tax-storms over recent years and in a period that has proven tough for many, a hike to taxes would have potentially pushed them over the edge and forced a further exodus from the market, which would in turn have a knock on effect on the rental market. Thankfully for now, this will be avoided.”