Landlords have a lot to focus on, and you might not think impending or possible changes are worth your time right now. However, it is vital you make informed decisions, and at Andrew Lees Lettings, we want to ensure you make the right decision in managing your rental property.

Recommendations for Capital Gains Tax (CGT) could have a significant impact on landlords, and ultimately, the rental market. We aim to keep you informed of any changes, but many landlords are already considering their options.

In addition to working closely with local landlords and tenants, we stay in touch with national news. If you want to make an informed decision on your rental property, contact us and we will be more than happy to assist you.

Will CGT impact you?

Possible changes to Capital Gains Tax (CGT) have concerned many landlords.

The survey of 1,100 landlords carried out by Find Out Now (10th February 2021 asked the question; “Are you worried that Capital Gains Tax will be increased in the March budget?”

52% of respondents said NO, with 48% of respondents answering YES.

The survey also asked; “Are you planning to sell your buy-to-let portfolio before a potential increase in Capital Gains Tax?”

• 57% of respondents said; “I will stick with my investment”

• 23% of respondents said “I will wait and see what is announced”

• 13% of respondents said “I am considering selling”

• 8% of respondents said “Yes, I am currently selling”

What might change with CGT?

If the recommendations made by the Office of Tax Simplification is followed, higher rate tax payers who sell a buy-to-let property (or an additional home) would see their CGT bills rise from 28% to 40%. This would be costly for many landlords.

For landlords on the basic rate of tax, there would be an increase from 18% to 20%. This is not as significant a rise, but anything which costs people money is rarely welcome.

The Office for Tax Simplification has also recommended a significant reduction in the Annual Tax Allowance. This currently stands at £12,300; but it could be reduced to £2,000.

Overall, the recommendation is for CGT to come into align with income tax rates, and this could see it rise to 45%.

James Forrester, a known name in the UK property market, commented: “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.”

As an experienced letting agent serving the Bridgwater community, and many of the surrounding areas, we are here to help. We promise to stay in touch with the latest technology, helping our clients to achieve more, and we aim to support the local community as best we can. If there is anything, we can assist you with; please contact Andrew Lees Lettings today.