New figures show that buy to let landlords quitting the sector or at least reducing their portfolios have helped the government pocket a record sum in Capital Gains Tax.
Buy to let is cited as one of three reasons why the UK’s CGT bills jumped 20 per cent from £10.8 billion to a record high of £12.9 billion in the 12 months to the end of January.
Other reasons include the cut to Entrepreneurs Relief, costing some business owners millions in extra tax when they sell their stakes, and the stock market rally in 2021, when the FTSE 100 rose 42 per cent from its pandemic trough.
Phil Kinzett-Evans of accountancy firm UHY Hacker Young says:“This is a very sharp increase in CGT largely paid for by an increase in taxes on entrepreneurs selling businesses.
“The last year has seen some entrepreneurs pay seven-figure sums in extra tax they weren’t expecting. Entrepreneurs’ Relief was a vital incentive for individuals to start and build businesses and the 90 per cent cut the Treasury introduced has hit hard.
“A lot of entrepreneurs accelerated plans to exit their businesses when rumours of the end of Entrepreneurs’ Relief started swirling in 2019 and 2020. Those who did saved themselves millions in tax by doing so.
“The red-hot housing market of the last 18 months was also a great opportunity for buy-to-let investors to sell properties and benefit from the equity they had built up.
“Add that to a great rebound from the start of the pandemic for the stock market and HMRC has had a massive year for CGT bills.”
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