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Capital gains tax on buy-to-let should be increased, says IPPR

Buy-to-let landlords could soon be required to pay more money in capital gains tax (CGT) under new proposals put forward by the Institute for Public Policy Research (IPPR). 

The plan is expected to spark outrage among many landlords given that the CGT tax take is likely to be bolstered by buy-to-let property sales over the next few years. 

There has already been a hefty rise in CGT receipts due to the changes in property taxes over the past two years. 

A number of landlords have responded to the government squeezing their returns by selling their assets, triggering an 18.6% increase in CGT payments. 

The latest data released by HM Revenue & Customs revealed the CGT tax take hit a record £9.2bn in the 2018-19 financial year, up from £7.8bn in the previous 12 months.

CGT applies to gains made from the sale of assets such as second properties and stocks and shares. 

All taxpayers have an annual CGT exemption of £12,000. Above this amount, lower-rate taxpayers pay 10% on capital gains and higher and additional rate taxpayers pay 20%. 

But people selling additional properties pay CGT at 18% if they are a basic rate taxpayer or 28% if a higher or additional rate taxpayer.

Capital gains are traditionally taxed at lower levels because of the investor risk, whereas employment income and savings interest are generally more guaranteed.

However, the IPPR believes that CGT rates on investment sales, second homes and buy-to-lets should be increased to income tax levels. 

The influential think-tank also proposes that the annual exempt allowance of £12,000 should be reduced to just £1,000. Under its plans, a basic rate income tax payer would face a CGT hike to 20% from as low as 10%. 

Meanwhile, higher and additional rate taxpayers would see CGT rates jump to 40% and 45%. 

Savers and investors could be slapped with an additional £120bn in tax over five years under the major overhaul of CGT. 

Sarah Coles, personal finance analyst at Hargreaves Lansdown, told the press: “The IPPR wants the government to ramp up the tax on savers and investors – both on the gains they make and any income they receive.

“It underlines how tax allowances and rates can change overnight, and the importance of wrapping as much of your savings and investments in Isa wrappers as possible - to help protect your money from tax, regardless of any policy change.

“The think-tank says its proposals are fairer than the current system. It underplays the fact that in reality, the vast majority of savers and investors pay tax on their income from work, they save and invest diligently for their future, and may pay a second round of tax on their investment income or gains.” 

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    Oh my god! Really! Legalized theft in supersize! What with John macdonnel ( hope I`ve spelt your name wrong) wanting to give a discount on my properties even if I don't want to sell them and now these baffoons wanting to tax the Cr**p out of me if I want to get rid I may as well just post em the keys and be done with it. I tell you if the country gets any worse I really think its time to live in Russia where its starting to look a better proposition than this Cr**p pit. Sorry rant over.


    Russia, I know a guy that married a Russian lady , he now lives in Russia very happily with his younger bride.

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    I get really annoyed about how BTL landlords pay far higher CGT than any other investors who can take their tax free gains every year. We should be able to roll up the unclaimed annual CGT allowances and set them against any eventual longer term gain. Our tax system favours those who take a short term view of investment and penalises those providing long term homes for those who won't or can't afford to buy their own homes.

  • John Cart

    Really!!!!!!!!! These cnuts don't know what to do next to screw money out of landlords.

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    It’s pure communism. I would say ‘let’s hope Labour never get in’ but you can equally imagine the Tories pulling this stunt. This happens and I’m off to somewhere more welcoming.

    John Cart

    This "Tory" government is really just Labour "lite". Stealing their policies in the vague hope of getting votes from Generation Rant.

  •  G romit

    Why don't they just raise all taxes on Landlords to 100% and have done with it!!!

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    We already pay a far higher rate of capital gains than anyone else @ 28%, or course it should be reduced to 18% like for most others but we are singled out. Its not a think tank just a Draconian Cess
    Pit, the scum of the earth. We all know why they are doing it, LL so fed up they want out but this is designed to stop them, they need to keep us there to be able to torture us in the future or if this don’t stop us getting out they make another killing while we exit.

    Paul Barrett

    Yep it is all a bit worrying.
    It really cannot be practical to remain a LL if there is no effective exit strategy.
    LL will be trapped by Govt into utilising their capital for the good of the feckless with the very likely possibility of their properties being stolen from them by tenants in a Labour RTB process.
    Quite frankly with such possibilities it can't make sense for LL to offer AST to anyone.
    I know if I had equity across multiple BTL properties I would retain as many as I could but on Residential mortgages and take in lodgers.
    There is no limit as to how many Residential properties one has.
    So to me it makes sense to reduce to possibly 2 or 3 Residential properties where there is no risk of RTB with lodgers.
    Or if unencumbered then offering AST to sharers means no RTB possibility.
    I can't see how a RTB policy would work if it was one of the LL homes!?
    But with all these pressures on LL it seems that substantial rationalisation of existing properties would make sense.
    It would seem that less will be more!


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