Property118 are running a blog on the possible matters that might be in the Autumn statement next week, predicting a large squeeze on landlords.
The blog can be seen here, and says (note that the revised EPC rating has not yet been published):
The government will target landlords in a bid to plug a £50bn hole in the country’s finances, reports reveal.
The move could see landlords losing thousands of pounds when selling their property under proposals which will come as a fresh tax blow for investors.
One report says that landlords could face an £8,400 squeeze in capital gains.
The revelation of the plan comes after thousands of landlords have already cashed in and left the PRS this year after facing increasing legislation, punitive tax changes, the potential of section 21 being abolished and having to upgrade properties to potentially meet an EPC rating of C.
Those who have sold up have enjoyed years of house price growth – but the Government now looks set to take a bigger slice of the profits made when selling.
Increasing the headline rate of CGT
That’s because the Chancellor, Jeremy Hunt, is looking at increasing the headline rate of CGT – and shaking up allowances.
Experts say that if capital gains were to be aligned with income tax, which has been recommended previously by a Government tax advisory body, then a higher rate landlord would not pay the current 28% on any gains, but 40%.
One analysis by tax accountants Blick Rothenberg has calculated that the move would see a higher-rate landlord paying an extra £8,400 in tax.
Their calculation is based on buying a property in 2017 for £226,000 and selling it today for £296,000 to achieve a gain of £70,000.
The tax firm points out that a second homeowner who bought a more expensive property would be hit even harder under the proposals.
‘Landlords are considering their options in the property market’
The firm’s Nimesh Shah told the Daily Telegraph: “Many individual landlords are considering their options in the property market, given increasing mortgage costs, and the compounded effect of the mortgage interest relief restriction introduced in 2017.
“With the suggestion that landlords will be hit with significantly higher capital gains tax, investors will need to seriously consider selling their properties before any rate rise takes effect to ‘lock-in’ the current highest rate of capital gains tax of 28pc.”
Other proposals being discussed include raising the rates on dividends or reducing the £2,000 allowance.
The Government’s plan would be a blow to those landlords who have been relying on the capital appreciation of their investment property or holiday let as a pension plan.
Various news outlets say the plan could be unveiled as part of the Chancellor’s Autumn Statement.
It follows a move by Rishi Sunak in 2020 when he asked the Office for Tax Simplification to review capital gains tax in an effort to simplify the tax regime in the UK.