The chancellor has asked the Office for Tax Simplification to review CGT - the tax on the profits made when people sell second homes and other assets
Property industry bodies have urged caution over a review of capital gains tax (CGT), launched by the chancellor, Rishi Sunak last week. ARLA and NAEA Propertymark, the organisations representing letting and estate agents, have warned of landlords and investors exiting the sector if taxes increase.
The chancellor has asked the Office for Tax Simplification to review CGT - the tax on the profits made when people sell second homes and other assets, such as works of art and stocks and shares.
Mr Sunak’s request follows reports that the government faces a £350 billion deficit this year, after putting in place measures to protect businesses and households from the financial impact of the coronavirus pandemic.
The chancellor wants the Office for Tax Simplification to examine how capital gains rates compare with other taxes and how they “distort behaviour”, amid concerns that taxpayers are using a variety of avoidance measures to cut their CGT bills.
Options for the review include recommending an increase in CGT rates, so they mirror those of personal taxation or removing the CGT-free allowance, which currently stands at £12,300 a year.
In a joint statement ARLA and NAEA Propertymark warned that changes to the tax may be a disincentive to landlords, saying: “The government needs to tread with care with the review into the capital gains tax system and all consequences, whether expected or unexpected, need to be considered.
“Increasing rates further for investment properties could reduce appetite from landlords who provide vital housing to the private rented sector, which will have a detrimental impact on supply.”
The Office for Tax Simplification is looking for views on the tax through an online survey, which closes on 20 October.
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