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TODAY'S OTHER NEWS

Landlords targeted for another huge tax from government

Landlords could be in line for another huge tax burden - a doubling of Capital Gains Tax. 

A report commissioned by the government suggests the measure on profits from the sale of second homes.

The Treasury's own Office for Tax Simplification, which has prepared the report, says £14 billion could be raised by cutting exemptions and doubling rates.

In July Chancellor Rishi Sunak asked the OTS to carry out a review of CGT to “identify opportunities relating to administrative and technical issues as well as areas where the present rules can distort behaviour or do not meet their policy intent.”

In particular, Sunak wanted a probe into "the acquisition and disposal of property" and "the practical operation of principal private residence relief".

Now the OTS says the tax could be doubled, made simpler in its structure, and brought roughly in line with income tax.

"The disparity in rates between Capital Gains Tax and income tax can distort business and family decision-making and creates an incentive for taxpayers to arrange their affairs in ways that effectively re-characterise income as capital gains" the report claims.

The OTS’s consultation - which received over 1,000 responses - revealed a range of areas in which Capital Gains Tax is apparently counter-intuitive and creates "odd incentives." Some respondents argued that CGT is a barrier to economic growth, others that it is a barrier to a more equitable society.

The government is under no obligation to implement the recommendations and a spokesperson for the Treasury says: "The government's priority right now is supporting jobs and the economy. We thank the OTS for their independent report which will be considered in due course.”

A second element to the OTS report, which will follow early next year, will explore technical and administrative issues.

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    Doubling... I'm thinking that means levelling either to your income tax band for that FY (so easily 40%, unlikely 20%) and no one off allowance for it?

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    There was an excellent article about it in the Daily Telegraph yesterday online, basically if you are a top rate payer you will pay CGT at that rate.
    The government is heavily under the influence of corrupt charities like Shelter and I've said it before here unless the spineless landlord groups and ARLA start getting nasty and pushing back, within a few years your investments won't be worth owning, it won't be long before they stop you charging the tenant damages at the tenancy end, that is of course if you can actually evict them by then not to mention swingeing rent controls, these are all coming unless we act now.

     
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    Richard: - you state Shelter is a 'corrupt' charity - which is a strong statement to make. Possibly libellous, I don't know. Just to fact-check, what is your evidence for this statement?

     
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    mps are exempt from all taxes

     
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    @ David Wirth, aren't 99% of charities corrupt ?

     
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    I wonder if they will abolish the annual £12.5k CGT allowance which stock market investors (I.e. Most MP's and Tory voters) can use every year but landlords can only use once when they crystallise a capital gain (largely inflation) when they sell, usually after a number of years of caring for and improving the property.

    I foresee two outcomes, neither of which will be what the Government wants.

    1. Landlords will dramatically reduce how often they sell or churn their properties, so the amount of CGT raised won't necessarily increase as the Government hoped for. Look at how the Stamp Duty hikes have reduced the amount of activity in the owner occupied sector, with many ugly unsuitable extension being built to avoid moving. This has all reduced the availability of smaller homes for the first time buyers. Any. CGT hike will add to this problem - not the outcome the Government wants!

    2. In the 80's and later, rents stayed relatively stable as landlords were happy with modest yields and healthy capital growth. Now that capital growth is stalled, rents have grown substantially in the last 10 to 15 years. A hike in CGT will add to. Landlords' potential costs and thus increase rents in the current market where demand outstrips supply. Again, not what the Government wants.

    It's notable that they are steering clear of a much fairer strategy - taxing the dead! Whilst I expect my children to pay a modest amount of IHT on my demise, I have taken steps to minimise this by buying much of my portfolio in their names and receiving the after tax rental profits as tax free gifts from them. However I wouldn't object too much if the rules were changed to close IHT loopholes and spread the load amongst all relatively comfortable families. However that would hurt the Tory voter base too much so it's easier to penalise landlords as most voters would support that, not realising that it's actually tenants who would be penalised in most cases.

    Any landlords who plan to sell up in a few years would be well advised to set up a company and sell to it NOW, so crystallising the current gain under current CGT rates, gaining the current tax advantages of owning properties in a limited company and also gaining the flexibility of selling a proportion of the company later over a number of years to maximise any remaining CGT annual exemptions.

    In summary, I think only changes to unavoidable taxes like Council Tax, PAYE and VAT will actually make any difference to the amount of tax revenue raised. All other taxes are too easily avoided or mitigated by sensible tax planning and creative thinking.

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    The Government pander to these lefty idealists who are invariably non-achievers or work (joke) for a Government Dept and could not hold down a job in the real World.
    This Country has totally lost it’s way, I suspect we will soon see an exodus of Wealth creators, and all you will be left with will be wingers.

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    boris is a leftie globalist

     
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    Its anything and everything to destroy anyone who tries to do good, Benefit Claimants are King the Corona proved that the only one not worried about rent arrears, the tax payer is responsible for them and their food, their clothing, their Children's allowance, their housing, their giro.

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    I tell you folks it’s time to go. I was in this for life a pension I’ve built up over 25 years. But it’s getting to the point of it’s not even yours anymore. Punishment for doing the right thing and not be a burden on the state . We live in a country where people who work hard are punished and ridiculed by the work shy and the state used as a weapon against honest citizens. If it wasn’t for my kids I’d be off New Zealand sounds great. I am not proud to be British. For me next year exit strategy.

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    Why does the government continue to target and punish its core voters, yet pander to the tenants who will never vote Tory? Sadly the alternative would be even worse. It's about time a new party stepped up to protect the interests of right minded people and I don't mean the Lib Dumbs.

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    "Pander to the tenants who will never vote Tory?" I thought governments were meant to address the needs of all sectors of the population, whichever way they voted. Are you really suggesting a new Party that 'panders' only to the needs of their own voters?

     
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    David Wirth. There already is a party that only panders to their own voters. It's called the Labour Party.

     
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    because boris is dumb--way out of his depth

     
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    All this will do is stop people from selling up once it’s introduced meaning it won’t raise the expected revenue.

    Andrew Murray

    Exactly . Who would ever sell their 100k house to get 60k .

     
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    I see Wirth is back. Shelter the charity ( Business) that houses no one. Before attacking other members statements tell me how many people do Shelter actually give shelter too??

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    They pay their staff and management big bucks though, I wounder if Mr Wirth is on the pay roll.

     
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    All these charities are big money businesses. Set up usually to play on the gullible public with sob stories to bring in big bucks

     
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    Shelter work for the local councils tell the non rent paying tenants sit put till bailiffs come. Lots of money paid to courts from the good old landlords. So we house the dregs for free then we pay courts to evict them 😂😂

     
    Andrew Murray

    No home owning guarantor, no tenancy. Simple.

     
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    No David just a level playing field and not be burdened by everyone else's family pay for your own kids nursery.

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    At the moment LL are housing the dregs for free. How good is that! Government have us by short and curlies

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    They have us by the short and curlies for now but that will change when more and more landlords refuse to rent to the dregs, then who's going to house them ?

     
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    Forget this Tax idea We will pay less and less in tax the more they ask for - People power is all the power you need. Don't be mugs. Take a Bat to the scum. Do nothing you are meant to do. Go underground.

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    or become a Gypsy and avoid all taxes and build your fortress on Britains green Fields. Much love!

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    The choice is CGT or IHT - just make sure you only pay one of these!

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    IHT isn't my problem, my children will have to sort that out, and after all even after IHT is paid they are still getting something for nothing.

     
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    Until the NRLA grow some balls and actually start to represent their members, landlords will continue to be screwed at every opportunity. What is the point of a landlords association if every time the Government shout jump, they reply, how hight?

    Landlords have never been in such a parlous state, no voice, no representation. Time for a change and a new organisation with some balls.
    I have asked the NRLA how they appoint their Directors and how much they get from members money, needless to say they haven`t bothered to rely. And I`m a member!!!

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    I'm a member of eastern landlords assoc , they are local and helpful, but no use where fighting the government are concerned, we do need someone with some balls to fight our side.

     
  • Ruan Gildchirst

    If LLs want to go from private ownership over to LTD company then mortgages are going to be very expensive and hard to get

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    Mr Wirth, hi David we wouldn't want to libel anyone perish the thought but now that you mention it I think LL's have a great case which should be crowd funded. I don't think I have heard a Local Authority or an anti LL organisation ever refer to LL's other than Rogue LL's surely that's Libelous if that's not defamation of Character what is. I wonder would lies be defamation like when Shelter alleged LL kept up to 44% of Tenants Deposits prior to introduction of Deposit Schemes in 2007, the truth was very much different less than 2% went to Dispute Resolutions, so we have Laws implemented base on untruths. Took away our 10% wear & tear, forced in "How to Rent" into our Tenancy Agreements against our wishes as if Tenants didn't know how to Rent with their iphones / laptops and 10 years more education usually than the LL's. They failed with the Private members Bill & Sarah Teather MP. then they were behind 2015 Deregulation Act alleging Property damage and a raft of other things to prevent the use of Section 21. This is some interference by an Organisation with Charity Status getting £15m pa, of our tax payers money to destroy us, changing the Laws of the Land as outsiders without being Elected Representative who's job it should be.

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    £15m in tax payers money, I would very much like to see a breakdown as to where that money, our money, is spent, I suspect most of it goes in over generous wages within shelter, just like most other '' charities ?'' , crowd funding ? count me in, I truly think most other landlords would chip in as well.

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    Count me in. Polly Neate and her £125,000 salary needs to be highlighted to those who are generously giving to shelter under the illusion it’s a charity.

     
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    What has happened to our once great nation. We used to be a nation of innovation and Grafters. Now your probably better off sitting on your back side waiting for your benefits. Covid will have to be paid for and the best way is to encourage people to take responsibility for themselves. Create jobs and get people off benefits.
    By driving out the small landlord in favour of the big Landlord he is creating more problems. Small mum and pop landlords are more likely to keep rents low. The do not usually factor in the time cost of being a landlord. Also the small landlord is more likely to be employing local tradesmen to do maintenance. hence creating Jobs and tax revenue. It also solves the housing shortage. The PRS is being taxed and Regulated to extinction.

  • Matthew Payne

    If the government wants to create economic activity and at the same time increase tax receipts from CGT, they should reduce it, not increase it. An increase would simply reduce the number of properties sold in any given rolling period, hence they reduced the top rate in income tax to 45%. Tax receipts go down when you tax too high, just look at the increase in stamp duty in 2016. Transaction numbers in 2016 were about 115,000 pcm, and now they are about 80,000 (this stamp duty gimmick aside).

    The elephant in the room is also the tens of thousands of landlords who would not be able to sell in the short or medium term as they are unable to gain vacant possession. Likewise, I don't know how saleable any rented property would be to an end user where their solictor wants vacant possession and section 21 notices are 6 months with no way of getting a possession order should you need one. Any tax increase would need to be delayed until at least April 2023. I am not sure how HMG can legally square off denying a landlords the ability to gain possession of their own property for anything between 12 and 36 months, during which time they double the tax for an activity that they wont allow them to engage in.

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