Just two years after the flat rate Capital Gains Tax (CGT) was introduced by Alistair Darling, it has been revised by the new coalition government
Announced today in the emergency budget by chancellor George Osborne, the CGT tax will stay at 18 per cent for low and middle income earners, however top-rate tax payers will pay 28 per cent to help compensate for raising the income tax threshold. It was originally though the CGT would be raised to 40 or even 50 per cent.
The tax applies to non-business assets, which includes buy-to-let properties, second homes and other investments. Bad news for buy-to-let landlords and investors, however there is a 10 per cent rate for entrepreneurs to cover the first £5 million of gains, and a taper relief system could be introduced where taxes are cut for long-term asset holders providing some relief for those affected.
In preparation for the rise, buy-to-let investors are likely to sell off their properties as soon as possible, which could result in a deluge of flats and apartments on the market and a rapid decline in prices. David Salusbury, chairman of the National Landlords Association says, ‘A tax increase of this nature will act as a barrier to further investment in residential property just at a time when there is an urgent need for more housing.’
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The CGT rate has risen by ten per cent
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