Chancellor Rachel Reeves’ tax hike rumours fuel anxiety in PRS

Chancellor Rachel Reeves’ tax hike rumours fuel anxiety in PRS

15:43 PM, 13th August 2024, About A day ago 15

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Rumours of a capital gains tax hike could take a toll on landlords and tenants.

In an interview on Bloomberg TV, Chancellor Rachel Reeves refused to rule out an increase in capital gains tax in the October budget.

This uncertainty is already affecting the property market, with the Royal Institution of Chartered Surveyors (RICS) reporting a 16% drop in new landlords instructing estate agents in the three months leading up to July, as landlords grow more concerned about Labour’s tax plans.

Strike the right balance

The Chancellor told Bloomberg TV: “I want to bring that tax burden down because I want to make Britain the best place to start and grow a business, and I want working people to keep more of their own money in their pockets.”

However, when asked directly about an increase in capital gains tax Ms Reeves refused to give a straight answer and said: “It is always important when you’re deciding tax policy to strike the right balance.”

Horrible toll on tenants

Sarah Coles, head of personal finance, at Hargreaves Lansdown, says an increase in capital gains tax could make landlords leave the sector and leave renters struggling to find a place to live.

She said: “The prospects for renters could get even tougher in the coming months if buy-to-let landlords take fright at rumours of a possible capital gains tax hike.

“If Rachel Reeves boosts the CGT rate to match income tax, a property investor who pays higher-rate tax would see their tax bill rise by two-thirds when they come to sell. This could encourage more landlords to sell up before any potential change comes in, cutting the number of rental properties again.

“This is likely to push up rents even further, taking a horrible toll on tenants.”

The news comes after a survey by Quilter, a wealth management and financial advisory firm, reveals UK landlords could be £11,000 worse off on average if capital gains tax (CGT) rates are adjusted to match income tax rates.


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Dennis Forrest

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11:48 AM, 14th August 2024, About 4 hours ago

Reply to the comment left by Tony Clements at 14/08/2024 - 11:13Ever since they brought in two rates of CGT they always count your capital gain as income to determine whether you pay the 18% or the 28% of CGT. (temporarily reduced to 24%)
The most you can earn before you pay 40% or higher income tax is £50,270. So for example if your normal income was £30,270 and you made a £43,000 gain pre October budget your tax situation would be as follows:
Deducting the £3,000 tax free allowance leaves a net gain of £40,000. £20,000 at 18% = £3,600 tax. £20,000 at 24% =£4,800. So at present your total CGT tax bill would be £8,400.
But yes you are right. If the new CGT rates are aligned exactly with current tax rates and bands the new rates would be 20%, 40% and 45%, and yes if the capital gain was very big and pushed the total of your normal income + the capital gain to over £137,710 then at least some of the gain would be taxed at 45%

William Robson

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12:34 PM, 14th August 2024, About 4 hours ago

Rome was not built in a day but they are having a good try at destroying Britain in the short time they have been in power. Riots police state increased taxes and cuts. Sounds like a recipe from people who are floundering. One of the trinity has kept very quiet
I should be one of their target electorate, blue collar worker all my working life. It’s enough to make you turn Blue

William Robson

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12:38 PM, 14th August 2024, About 4 hours ago

Reply to the comment left by Dennis Forrest at 14/08/2024 - 11:48
Who decides what the gain is

Jack Jennings

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12:46 PM, 14th August 2024, About 3 hours ago

Reply to the comment left by William Robson at 14/08/2024 - 12:38
You pay when you've sold it.
The final price minus the price you bought it for. Multiply that by the ratio of (months not your primary residence/ total months). Subtract any allowed CG costs and subtract 3k. Multiply by CG rate.
You get 30 days to pay up I think.

Jo Taylor

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17:07 PM, 14th August 2024, Less than a minute ago

Reply to the comment left by Dennis Forrest at 13/08/2024 - 10:59
It would be rather silly to increase it to 40% for the reason you say in your last sentence. Indexation for inflation would need to be introduced as there would not be any incentive for private money to be invested in anything in the Uk.

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