An estimated 48% of landlords are worried about the planned increase to Capital Gains Tax (CGT), according to Barrows and Forrester.
An estimated 48% of landlords are worried about the planned increase to Capital Gains Tax (CGT), according to Barrows and Forrester.
As part of the proposed change, higher rate taxpayers selling buy-to-let or second homes would see their CGT bills rise from 28% to 40%.
Meanwhile, basic rate taxpayers would see their CGT tax bills increase from 18% to 20%.
Furthermore, the Office for Tax Simplification called for a major reduction in the annual tax allowance which currently sits at £12,300, however could be lowered to £2,000.
The Office for Tax Simplification has recommended for CGT to be more closely aligned to income tax rates, which can rise to 45%.
According to Barrows and Forrester, investors who have owned properties for a long time and those with homes in hotspots where prices have risen considerably are likely to be most affected by the planned increase to CGT.
However despite property investors expressing concern around the changes, over half (57%) intend to continue with their investment whether the proposal goes ahead or not.
Just under a quarter (23%) plan to wait and see, 13% are considering selling and 8% are currently in the process of selling due to the planned increase.
James Forrester, managing director of Barrows and Forrester, said: “Buy-to-landlords have been hit hard by the government in the past few years, and now they have something new to worry about.
“They’ve already had to cope with the 3% stamp duty surcharge, as well as a reduction in mortgage income tax relief, so perhaps landlords are numb to this latest nail in the coffin, although it remains a worry for nearly half.
“The changes would likely result in landlords prioritising annual income from their investments rather than capital growth, which could see investors target regions of the country with high rents compared to house prices.
“It’s positive that a number of landlords plan to stand their ground despite the changes, though we’re still concerned that owners of properties that have experienced substantial capital growth could sell up to make hay while the sun shines if this tax hike is confirmed.
“Landlords will be keeping a close eye on these potential changes to CGT, which could have a sizeable impact on the state of the housing market.”
