An MP has spoken out in favour of buy-to-let landlords by insisting that they should never have been denied a tax break on their property profits after the Chancellor George Osborne excluded them from a significant capital gains tax (CGT) cut in his Budget statement.
Landlords continue to be stung with a hefty 28% CGT bill when they sell up, a rate that the Chancellor himself described as one of the ‘highest in the developed world’.
Residential property was deliberately excluded from the tax cut that sees investors in other types of asset benefit from the higher rate of capital gains tax reduced from 28% to 20%, while the basic rate was reduced from 18% to 10%.
Kevin Hollinrake, the Conservative MP and co-founder of Hunters estate agents, is tabling an amendment to Clause 72 of the Finance Bill that would extend the new 20% CGT rate to private landlords when they sell their rented property to a sitting tenant.
The motion to put the measure into an amendment to the Finance Bill, which is currently going through parliament, was originally put forward by the Residential Landlords’ Association (RLA) which believes that a growing number of landlords are now thinking about exiting the market as renting becomes financially unsustainable for them.
Recent research from the RLA found that that 77% of private landlords would consider selling their property to tenants if the tax liability was reduced.
The RLA will be asking members to write to their MP encouraging them to back the proposed to the Bill.
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Of course landlords should pay this Capital Gains Tax as George Osborn has brought it in. "Those with the broadest shoulders should carry the greatest burden". The economy is going through difficult times, especially with Brexit. Landlords and others with money and investments should be paying their fair contribution at this time. Those landlords who complain should suggest where else the money should come from to try to balance the books. Time to fall silent and pay.
So what you are saying is that there should be one tax system for some and a different one for others? Hmmm, I wonder what assets you have that could be unfairly taxed in relation to other people's?
I needed to add that I'm not sure if you understand the implications of these tax attacks. It is entirely possible that a LL could have a situation where due to C24 he has a property running at a loss, but is unable to sell the property because of lack of equity through borrowing. Even if he is at break even he may not have enough gain to pay CGT so in many cases will be doomed to losing everything. A fair tax situation this is not! Osborne promoted borrowing through the Funding to Lending programme and is now punishing LLs for taking up the cheap mortgages that were made widely available through the scheme.
David, if this were the case, then all businesses should also shoulder the burden, along with all the other people who spend their money foolishly rather than invest for the future. Private landlords are being penalised with all sorts of further tax burdens, when companies are not - and that is NOT fair
This is a facile argument
If you reduce CGT then more landlords are likely to sell which will increase the revenue for the treasury
Secondly if the government's agenda is to reduce the BTL sector then reducing CGT will encourage landlords to sell up and exit the market.
Absolutely Daniel but there lies the issue. The Government's agenda is nothing to do with reducing BTL. Sure if it happens Osborne won't care, but his aim is revenue take. Mind you, now he's said that the UK has to be more realistic (the UK, not him) in it's goal of eliminating the deficit by 2020 then maybe he won't be quite so aggressive with his attacks.
Maybe I am too cynical but I see a pattern here. The Section 24 changes will force many landlords to exit the market in the coming years. On selling they will have to pay the higher CGT rate of 28%, - bringing in a lot of money for the Exchequer.
Whilst I do not agree with David's sentiments the economic arguments are fairly clear. The MIS-conception is that landlords are rich and so can afford to pay more.
The reality is that some landlords are rich, but many others are at the low end of middle earners. They saved hard to buy one or two BTL's to provide some additional income, but mostly as a retirement nest egg. The Section 24 changes destroyed this route to financial stability and they now have to sell. Kerchinggg for George and the Government.
Whilst the economics are obvious the politics are not. The Conservatives (remember, they were the ones who encouraged self reliance, small businesses and saving for one's old age) seem determined to alienate one of their core groups. Which landlord would vote for them now, if there is any sort of alternative in their area? I know of many in my local area who say they will never vote Conservative again.
Landlords don't want special treatment. They just want to be treated in the same way as any other small business. If George Osborne does this he may get our support back again. With all that is happening they need all the help they can get.
I think Osborne's agenda was also political. Landlords are and have been an easy target for vitriol from the press and therefore are seen as 'evil and money-grabbing' by some of the electorate. I think his attach was partially motivated by this rather without realising how many landlords there really are.
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