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Capital Gains Tax threat makes landlords consider selling - Zoopla

One of the country’s leading property experts says landlords are now reassessing their portfolios as a result of possible Capital Gains Tax increases.

No CGT rise is expected this year but it is considered likely that next week the government will issue consultation papers looking at future CGT changes. 

Now Grainne Gilmore, head of research at Zoopla, warns on a blog: “There’s several possible reasons for landlords reassessing their portfolios. Firstly, landlords may be looking to crystallise capital gains amid speculation that CGT changes may be on the way.


“Secondly, they may also be eager to take advantage of momentum in the housing market, with house prices close to a four-year high. And thirdly, they may be reacting to the changing dynamics of the rental market with negative pressure on some city centre rents. It’s an interesting trend, but it’s worth noting that the rented homes being put up for sale account for less than one per cent of private rented sector stock.”

March 23 was revealed some weeks ago as the date when the Treasury would unveil proposals for longer-term reform, likely to include CGT, Stamp Duty and Council Tax.

Jesse Norman, financial secretary to the Treasury, has already tipped off MPs in a letter saying: “The goal of making these announcements separately to the Budget, but still all on a single day, is to give a range of important but less high profile measures greater visibility among, and opportunity for scrutiny by, parliamentary colleagues, tax professionals and other stakeholders.” 

CGT is tax paid on the profit of the sale of any additional home - a buy to let or a holiday cottage, for example - and currently the rate of tax stands at 18 per cent for basic rate taxpayers and 28 per cent for those in the higher rate threshold. There is an annual allowance of an initial £12,300 on which no CGT would be paid. 

However, the Office of Tax Simplification has called for CGT to increase in line with income tax rates to 20 per cent at the basic rate and 40 per cent at the higher rate, while also lowering the initial amount exempt to just £2,000. 

Benham and Reeves lettings agency says that in the last decade, the average UK house price has increased from £18,703 to £251,500, meaning the capital gain of a holiday home or a buy to let investment during that time sits at £82,798.



Based on this example, and selling in the current market and with the current level of CGT, a lower rate taxpayer would pay £12,690 while a higher rate taxpayer would pay £19,739.

However, should the Office for Tax Simplification proposals be made law, the tax owed would climb to £14,100 for a basic tax rate payer, while those in the higher threshold would see it increase to £28,199; a jump of £8,460.

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    Increase in CGT; EPC ratings required to be C; no section 21 eviction; forced to take pets - why would anyone choose to be a LL in 2021 and beyond?

  • Fery  Lavassani

    Tricia to your list add, void periods, rent arrears and maintenance (repairs). With these three together with tax and legislations that you mentioned, we end up with the five things that keep landlords awake at night.

  • icon

    Add HMO’s this is a massive cost I am re-doing again, 7 falling due again for renewal this year, all licensed twice before at least some 3 times & one will be 4th time, only applies to halve the Renter LL’s ????, anyway c/gains tax examples are rubbish it will be hundreds of Thousands of £’s

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    Problem with CGT is that once upon a time, taper relief was applied to the gain in line with how long the property was owned. That took in to account inflation.

    Now if tax rates are to be increased and allowances reduced without inflation being taken in to account, and house prices increased in line with inflation, the tax liability may be substantial on profits not made.

    I don’t mind paying taxes but I don’t want to pay them on gains that are not real. Adjustment needs to be made for inflation.


    Yes it was fair then, now it isn't

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    Legalised theft. Plain and simple.


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