We say NO to higher CGT on buy-to-let homes

Any increase in Capital Gains Tax could serously threaten the supply of rental homes

In the same week that Landlord Today reports one in four buy-to-let landlords is hoping to expand their property portfolio this year, the Treasury has announced it is to “seek views about capital gains tax”. This sounds ominous for those same BTL landlords and has prompted speculation that Chancellor Rishi Sunak is planning a tax hike for second homeowners, including people with buy-to-let properties.  

With a gaping hole in the country’s finances – which could be as much as £350bn – it’s pretty obvious that the Chancellor needs to claw back that money somehow. So taxes are in the spotlight. Landlords may be able to take comfort from the fact that the Chancellor has said the review is just an administrative formality. But with Rightmove reporting that rental demand is 40% higher than this time last year, any additional taxation that could damage supply looks a very bad decision indeed.

Landlords, who are already under the cosh from this year’s CGT changes, as well as the Tenant Fees Act and a range of new regulations now in force, are likely to quickly offload their rental homes if they are no longer viable and move their investment elsewhere.  At a time when the government is trying to support the housing market and make it easier for people to buy, anything that could push up prices by flooding the market with properties looks counterproductive.

If the Government is serious about boosting the housing market recovery and delivering more rental homes, we think it should exempt buy-to-let landlords from any increase in CGT.

The taxpayer will ultimately have to foot the bill for the economic downturn resulting from the pandemic. But how the government will choose to distribute the tax changes that will be needed is still uncertain.

We may not be able to do anything about CGT rates – but we can help if you’re unsure about compliance. To give landlords peace of mind that they need never fall foul of the rental regulations again, we’ve developed a great new cloud-based lettings platform that takes all the hassle out of compliance.  PlanetRent has a simple dashboard to help you manage compliance for one property or a whole portfolio. So if you are worried about complying with all the regulations that you need to be aware of, why not download it today. See all the great features we’ve included here and give it a try.

www.planetrent.co.uk

Why not READ our Property Blog: www.ringleypropertyblog.co.uk

Landlords, don’t forget the changes to CGT – they apply to you!

A number of tax changes that impact landlords are now in force

Although COVID-19 is uppermost in all our minds at the moment, it’s important to remember that all the same legislation still applies to the way you operate your rental property – and so do tax changes. For landlords, this April sees a big change to the rules that govern Capital Gains Tax as well as a new regime for lettings relief.

From 6 April, new legislation is in force that means anyone selling a property eligible for capital gains tax (CGT) must pay what is due within 30 days of completing the sale. Up until now, anyone who paid tax via a self-assessment tax return could report a sale and pay what they owed via their tax return. That gave sellers a period of between 10 and 22 months to find the money. Now, those days have gone and anyone who doesn’t comply with the new rules could find themselves paying hefty charges.

Tax specialists Royds Withy King explained the implications in the press last week, saying: “Where CGT is due, the change could mean that sellers have to get funds in place to cover the CGT liability before the sale is completed…30 days is not very long at all. This could be a particular issue where there are large historic gains.” So it’s important not to get caught out.

Other reforms coming into force this month are:

  • Lettings relief, whereby landlords could claim tax relief on any let property that used to be their main residence, can now only be claimed for the period during which the property is shared with a tenant.
  • Principal private residence tax relief, which applies to landlords selling a property which was previously their main residence, is reduced from 18 to nine months.

Also, the final stage of Section 24 of the Finance (no 2) Act 2015 has now been enacted. This amendment to UK tax law means the amount of income tax relief landlords receive for residential property finance costs is now restricted to the basic rate of tax. The changes have been phased-in since April 2018 and mortgage tax relief for buy-to-let landlords is now replaced by a tax credit of 20%.

This change applies to:

  • Landlords who are UK residents with residential rental properties, regardless of location
  • Non-UK resident landlord with residential rentals based in the UK
  • Partnerships and Trusts with residential rental properties

If these changes apply to you, click here for detailed information on CGT as it affects landlords and an explanation of the new rules

www.planetrent.co.uk

Why not READ our Property Blog: www.ringleypropertyblog.co.uk