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Labour's tax proposals would drive another nail in the coffin of buy-to-let - pushing savvy savers towards pensions |
Capital Gains Tax receipts have risen from £3.9billion to £9.2billion in the past five years, according to HMRC figures released today. This is partly as a result of some landlords choosing to offload buy-to-let properties as mortgage interest tax changes start to bite. At the moment, gains made on the sale of a buy-to-let property are added to the owner’s other income. Any part in the basic rate is taxed at 18%, and for higher and additional rate taxpayers it is 28%. The Labour Party’s manifesto pledged to increase CGT rates to allign with income tax – which are 20% for basic rate taxpayers, 40% for higher rate taxpayers, and 45% for additional rate taxpayers. Labour also plan to introduce a holiday home levy worth the equivalent of 200% of the current council tax bill for the property. Sean McCann, chartered financial planner for financial advisers NFU Mutual, said: “Capital Gains Tax receipts have more than doubled in the past five years as a result of people selling buy-to-lets due to the onerous tax treatment. “Landlords are being caught in a very effective pincer movement from the taxman. “From one side, the higher rate tax relief on mortgage interest is gradually being phased out, making letting out properties less profitable. “From the other side, landlords looking to sell buy-to-let properties are being squeezed with an extra eight per cent Capital Gains Tax. “This trend is likely to continue as many of those who have invested in property for their retirement will be tempted to turn to pensions because of the tax benefits.” |
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