Chancellor Rachel Reeves rules out CGT hike for buy-to-let properties in Budget?

No CGT increase on BTL property? Forgive me for being skeptical but I’ll believe it when I see it.

Reply to the comment left by JohnSnow at 18/10/2024 - 10:40
“You know nothing, John Snow” but I do agree with the sentiment.

"It was famously pro-growth Conservative chancellor Nigel Lawson who equalised capital gains tax with income tax rates"

He also rebased costs of all assets along with indexation relief.

I suggest Pranesh Narayanan reads the full context of chancellor Lawson's speech rather than cherry picking "facts" in isolation;

"Lastly, capital gains tax. Strictly speaking, this should not be a tax on the original capital at all. Nor is it, so far as gains which have arisen since 1982 are concerned, thanks to the indexation provisions introduced by my predecessor in 1982 and extended in my 1985 Budget. But for gains that arose before 1982 the tax falls largely on purely paper profits resulting from the rampant inflation of the 1970s. In other words, it bites deeply, and capriciously, into the capital itself.

This Budget thus ends once and for all the injustice of taxing purely inflationary gains."

-Something most landlords and entrepreneurs would wholeheartedly agree with.

"Chancellor Rachel Reeves WILL NOT change the rate of capital gains tax on the sale of buy-to-let properties in the Budget ... "

For now maybe but it is coming. National Insurance on rental income as well.

Unbelievable someone who has researcher in their job description can make such a fool of themselves and believe Lawson’s equalisation as it was done in the 1980s is equivalent to just aligning CGT with income tax rates today with no other adjustments.

Many landlords are old enough to remember the 1980s as adults, if these lefty millionaires think they are too rich they can always set up a charity. My set up capital as a landlord in 1990 came from the sale of a trading business on which I had to pay a chunk of CGT (no rollover relief available to invest in residential) and that business was funded by hard graft in a factory which was of course subject to income tax.

Putting the top slice of any gain into 45% tax for property owned for decades (which is likely to happen often despite the individual never earning enough year by year to be anyway near that income tax band) is surely just the opposite of any sensible policy to encourage long term property ownership for the open ended tenancies the Renters Reform bill is bringing in.

Don’t these think tanks and business owners recognise that a healthy rental market is an essential for mobility of labour and supporting the entrepreneurship necessary for economic growth. Even employees who would normally own their homes often rent initially when moving for a job opportunity.

Reply to the comment left by Cause For Concern at 18/10/2024 - 11:12
“You know nothing"

> That makes two of us

Hope this is true!

They need to bring back CGT indexation allowances and taper relief.

Indexation Allowance and Taper Relief were regarded as fair because they aligned the taxation of capital gains with principles of equity, particularly by ensuring that only real economic gains were taxed and by encouraging long-term investment. Here’s why they were seen as fair:

Indexation Allowance:

Protection from inflation: Indexation adjusted the base cost of an asset in line with inflation, meaning that taxpayers would not be taxed on “paper gains” that arose purely from inflation. This was seen as equitable because it ensured that CGT applied only to actual increases in the asset’s real value, not the inflationary increase.

Neutrality: By factoring in inflation, the allowance helped maintain fairness across different economic periods, ensuring that individuals and businesses did not suffer from high taxes in periods of rising inflation, where asset values increased only in nominal terms.

Taper Relief

Encouragement of long-term investment: Taper Relief incentivised holding assets for longer periods by reducing the taxable gain based on how long the asset had been held. This was seen as fair because it rewarded patient, long-term investors who contributed to economic stability, as opposed to those making short-term speculative gains.

Progressive reduction in tax burden: The tapering effect meant that, over time, individuals could expect a lower CGT rate on their gains, which was particularly appealing for entrepreneurs and business owners looking to grow assets over the long term. The longer the asset was held, the more tax-efficient it became, which was viewed as fair to those who made lasting investments.

Overall, these reliefs were seen as reflecting economic reality and promoting investment behaviour that was considered beneficial for the wider economy, while avoiding taxing gains that were merely nominal due to inflation or short-term price movements.

It's hardly that government has no responsibility for inflation since their monetary policy committee meets three weekly while landlords must take the long view being able to increase revenue just once per year.
That's a massive risk which is fully capable of destroying any trading surplus meaning that asset appreciation is all that remains. A double whammy of inflation impact, without indexation.