{"id":6032386,"date":"2020-07-28T09:23:59","date_gmt":"2020-07-28T08:23:59","guid":{"rendered":"https:\/\/www.buyassociation.co.uk\/?p=6032386"},"modified":"2020-07-28T09:23:59","modified_gmt":"2020-07-28T08:23:59","slug":"capital-gains-tax-overhaul-how-could-it-affect-the-property-market","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-hk\/2020\/07\/28\/capital-gains-tax-overhaul-how-could-it-affect-the-property-market\/","title":{"rendered":"Capital gains tax overhaul: how could it affect the property market?"},"content":{"rendered":"

There’s no crystal ball to predict what Chancellor Rishi Sunak will announce this autumn with regards to capital gains tax. But rumours are rife about what it might mean for property investors.<\/strong><\/p>\n

The UK tax system is continually under review by the government and the Treasury. This ensures it is fit for purpose, taking revenues, exemptions and potential areas for improvement into account. Capital gains tax affects hundreds of thousands of individuals and businesses alike in the UK, and further changes to the tax are now on the cards.<\/p>\n

In an open letter<\/a> to the Office for Tax Simplification, Chancellor Rishi Sunak proposed a review earlier this month. He requested that the OTS look into how to simplify CGT, as well as identify any issues. He also asked for proposals on “the regime of allowances, exemptions, reliefs and the treatment of losses within CGT, and the interactions of how gains are taxed compared to other types of income”.<\/p>\n

At this stage, it is unclear exactly what could change, but there are many obvious target areas. Property investments<\/a> make up a major proportion of CGT revenue for the government, for example. With rumours that the results of the review could materialise in the Autumn Budget, many are already preempting the outcome.<\/p>\n

Simplifying the tax<\/h4>\n

The most positive result of the rethink could be that the tax becomes much more simple. It is currently fairly complex, which can cause issues for many.<\/p>\n

Sean McCann, chartered financial planner NFU Mutual said that CGT contains traps with “nasty surprises”.<\/p>\n

“Few people realise that they may have to pay CGT when they give away property, shares or other investments. For example, if a parent gives a second property or a portfolio of shares to their children in order to help them out, that counts as a disposal and could be liable for CGT.<\/p>\n

“It would make sense to simplify the rules to encourage the older generation to pass on wealth<\/a> during their lifetime.”<\/p>\n

What about property investors?<\/h4>\n

Earlier this year, the Treasury brought in a few capital gains tax changes relating to property. This included a tighter payment deadline, private residence relief changes and lettings relief changes. You can read more about these updates in this article<\/a>.<\/p>\n

The buy-to-let market has come under much scrutiny from the government recently. The industry has already faced some major tax changes with Section 24<\/a> over recent years, as well as additional stamp duty<\/a>. This could therefore make it a target for CGT adjustment, too. For example, capital gains tax rates could be aligned with income tax rates, which would increase the bill for some selling second homes and buy-to-lets.<\/p>\n

However, if the Treasury does change this, some believe landlords will simply stop selling if they could avoid it. Currently, CGT rates are lower than income tax.<\/p>\n

Jo White, a director in the Tax Advisory division says:\u00a0\u201cBuy-to let-investors with portfolios held personally or in corporate structures will feel these changes if they look to sell parts of their portfolio or shares in the company that holds property.”<\/p><\/blockquote>\n

“Property investors have been the target of many recent tax changes and may feel unfairly targeted at a time when they are facing Covid<\/a>-related rent holidays from tenants.<\/p>\n

\u201cIndividuals with a holiday or second home could face, if they are an additional rate taxpayer, a CGT rate of 45 per cent on any gain from the sale of property and will have just 30 days to settle any liability.\u201d<\/p>\n

Many of the UK’s landlords and property investors will be eagerly awaiting the outcome of the latest tax review to see how it affects them later this year.<\/p>\n","protected":false},"excerpt":{"rendered":"

There’s no crystal ball to predict what Chancellor Rishi Sunak will announce this autumn with regards to capital gains tax. But rumours are rife about what it might mean for property investors. The UK tax system is continually under review by the government and the Treasury. This ensures it is fit for purpose, taking revenues,… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":4424,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[26],"tags":[402],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts\/6032386"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/comments?post=6032386"}],"version-history":[{"count":0,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts\/6032386\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/media\/4424"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/media?parent=6032386"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/categories?post=6032386"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/tags?post=6032386"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}