Capital gains tax soars as buy-to-let investors ‘unload properties’

Capital gains tax receipts hit £5.5bn in January, leaving the Treasury on course to rake in as much as £8.8bn this tax year, according to analysis of the tax receipts by NFU Mutual, the financial advice firm.

The analysis suggests that the taxman is set to collect around £0.4bn, or 5%, more than in 2016-17, thanks in part to a sharp rise in the number of private landlords selling rental properties

HMRC usually receives a glut of capital gains tax receipts in January as people fill in their self-assessment tax forms, but with a growing number of buy-to-let landlords reducing the volume of properties they own, Sean McCann, chartered financial planner at NFU Mutual, points out that the Office of Budget Responsibility (OBR) estimates that receipts could hit £9.9bn in the next tax year.

“A large chunk of these receipts will be from people selling houses and flats they’ve been renting out.  In doing so, they are hammered by an extra 8% surcharge on standard rates of capital gains tax,” he said.

“The OBR forecasts show receipts increasing sharply to £13.3bn in five years’ time, which suggests that more and more buy to let investors are expected to unload properties as tax changes bite,” McCann added.

As most buy-to-let investors will know, anyone selling a property that is not their main residence will pay 18% or 28%, depending on the size of the gain and their other income.

McCann added: ‘’The slashing of tax relief on mortgage interest payments means that for a growing number of landlords, the figures no longer add up. Many have enjoyed rising property prices over many years and will seek to cash in, providing a tax bonanza for the Government.

“Many of our customers work in partnership with their spouse or civil partner to reduce their combined tax bills, taking advantage of each individual’s CGT allowance of £11,300, by transferring shares and property between them. However we’ve been warning our customers to watch out for potential tax traps. In some circumstances, transferring property between spouses could trigger a stamp duty charge.” 


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