x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

Encourage landlords to “exit their investments” by simplifying CGT

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.

“It is not clear how this provision would work in practice, but it will more than likely involve specific anti-avoidance provisions so that the relief is not abused - for example, by selling the property to a family member who is a ‘tenant’ of the property.”

Shah suggested: “A better proposal would be to simply have a flat rate of CGT, and remove the exclusion for gains on residential property. With the forthcoming changes to mortgage interest relief restriction for buy-to-let landlords taking effect from 6 April 2017, individual owners of residential property are looking at ways to exit their investments, but many are being put off by the higher rate of CGT.

“The government has said on numerous recent occasions that it wants to create more movement in the UK’s housing market and aligning the CGT rate would serve to do just that, as well as simplifying the CGT rules in an already complicated tax system.”

  • Bill Wood

    I wish everything could be simplified.
    Even my accountant, Chartered and with many years experience can't cope!
    I expect HMRC have difficulty as well.

icon

Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up