The end of the financial year, and the March Budget, creates issues for landlords to consider, and at HoldenCopley, we are on hand to ensure you make informed decisions when running your business.
As a landlord, you need to consider short and long-term outcomes, and you should always have an exit strategy in mind. Hopefully, you have no intention of leaving the rental market soon, but it is helpful to be aware of the costs of doing so, and how this might impact on you.
Many landlords are considering the impact of changes to CGT
Possible changes to Capital Gains Tax (CGT) have concerned many landlords, and if you would like advice on this matter, we can help.
The survey of 1,100 landlords carried out by Find Out Now (10th February 2021 asked the question; “Are you worried that Capital Gains Tax will be increased in the March budget?”
52% of respondents said NO, with 48% of respondents answering YES.
The survey also asked; “Are you planning to sell your buy-to-let portfolio before a potential increase in Capital Gains Tax?”
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57% of respondents said; “I will stick with my investment”
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23% of respondents said “I will wait and see what is announced”
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13% of respondents said “I am considering selling”
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8% of respondents said “Yes, I am currently selling”
What might change with CGT?
If the recommendations made by the Office of Tax Simplification is followed, higher rate tax payers who sell a buy-to-let property (or an additional home) would see their CGT bills rise from 28% to 40%. This would be costly for many landlords.
For landlords on the basic rate of tax, there would be an increase from 18% to 20%. This is not as significant a rise, but anything which costs people money is rarely welcome.
The Office for Tax Simplification has also recommended a significant reduction in the Annual Tax Allowance. This currently stands at £12,300; but it could be reduced to £2,000.
Overall, the recommendation is for CGT to come into align with income tax rates, and this could see it rise to 45%.
James Forrester, a known name in the UK property market, commented: “Buy-to-landlords have been hit hard by the government in the past few years, and now they have something new to worry about. They’ve already had to cope with the 3% stamp duty surcharge, as well as a reduction in mortgage income tax relief, so perhaps landlords are numb to this latest nail in the coffin, although it remains a worry for nearly half. The changes would likely result in landlords prioritising annual income from their investments rather than capital growth, which could see investors target regions of the country with high rents compared to house prices.”
We offer property management, property to rent and property for sale in Arnold, Woodthorpe, West Bridgford, Hucknall, Carlton, Wilford, Mapperley and throughout the Nottingham area. If you would like to arrange an appointment to help you negotiate the local buy-to-let market, please contact Holdencopley today by calling us on 01158969800 or emailing steven@holdencopley.co.uk.