Landlords concerned about capital gains tax increase.

The tax would mainly affect Buy-to-Let Landlords.

Buy-to-let landlords are nervously watching the planned increase in capital gains tax (CGT), which would dramatically increase the amount they would have to pay if they sold an investigation by agent Barrows and Forrester revealed.

Almost half (48%) of the owners are concerned about the possible increase in CGT.

The recommendation from the government’s Tax Simplification Office would make higher-rate taxpayers pay 40% on the profits they make from buy-to-let and second homes, compared to 28%.

James Forrester, managing director of Barrows and Forrester, said: “The government has hit homeowners who buy from second-owners hard in recent years, and now they have something new to worry about.”

“They have already had to deal with the 3% stamp duty surcharge, as well as a reduction in the mortgage income tax relief, so perhaps homeowners are insensitive to this last nail in the coffin, although it is still a concern for almost half.”

“The changes would likely result in homeowners prioritizing annual investment income over capital growth, which could cause investors to target regions of the country with high rents compared to house prices.”

Base rate taxpayers would be less affected, but would still see their CGT tax bills increase from 18% to 20%.

The Office for Tax Simplification also called for a significant reduction in the Annual Tax Relief, which currently stands at £ 12,300 but could be lowered to £ 2,000.

It is recommended that CGT be more aligned with income tax rates, which can go up to 45%.

Landlords remain hopeful despite new taxes.

Despite property investors being understandably concerned about these changes, the majority (57%) plan to stick with their investment no matter what, while a quarter (23%) are taking a wait-and-see approach.

Only 13% are considering selling, while less than 1 in 10 (8%) are currently in the process of selling.

Forrester added: “It is positive that several homeowners plan to hold their own despite the changes, although we are still concerned that property owners who have experienced substantial capital growth will be able to sell to make hay while the sun is shining if this tax increase is due confirmed.”

“Owners will be on the lookout for these possible changes in CGT, which could have a considerable impact on the state of the housing market.”

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