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The detrimental impact of increasing Capital Gains Tax

Friday 17 July 2020

Rishi Sunak, MP wrote to the Office of Tax Simplification (OTS), asking for a review of Capital Gains Tax (CGT) and aspects of the taxation of chargeable gains which has raised concerns with Propertymark.

The letter requests that “areas where the present CGT rules can distort behaviour or do not meet their policy intent” to be reviewed and looks for any “proposals from the OTS on the regime of allowances, exemptions, reliefs and the treatment of losses within CGT, and the interactions of how gains are taxed compared to other types of income”. Propertymark firmly believes that if Capital Gains Tax (CGT) is increased this will almost certainly have an adverse impact on the private rented sector.

CGT is currently charged at 28 per cent on the sale of second homes and buy-to-let properties, and in 2017-18, around 300,000 people paid CGT, generating almost £60 billion.

Propertymark believes the Government needs to tread with care over the review and all consequences, whether expected or unexpected, need to be considered. We are questioning if it will include allowances too, as with the recent stamp duty changes, taking people out of the tax equation should also be an aim.

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.

What Propertymark is doing

Propertymark will continue to raise these expressed concerns to Government and urgently request that if CGT is to be increased then a thorough review of the implications needs to be undertaken before a decision is made.