The government could go a long way towards boosting the stock of properties available for sale, which remains close to record low levels, by introducing a flat rate of capital gains tax (CGT) and removing the exclusion for residential property to create more movement in the housing market, according to London-based chartered accountants Blick Rothenberg LLP.
In recent comments, Conservative MP Kevin Hollinrake proposed a reduction in the rate of CGT paid by landlords when they sell their property to a sitting tenant. Earlier in the year, the former chancellor George Osborne had cut the main rate of CGT from 28% to 20% at the last Budget, but the rate reduction specifically excluded capital gains arising on residential property.
Nimesh Shah, partner at Blick Rothenberg, said: “Hollinrake’s proposal theoretically makes sense, as it encourages landlords to sell their property to the tenant in return for a tax rate reduction. However, this would add yet another unnecessary provision to the current CGT and residential property tax regime, which has seen a raft of changes over the last five years.