Capital Gains Tax Break Proposal in Autumn Budget

  • Readers Rating
  • No Rating Yet!
  • Your Rating


Rumours are circulating prior to the Autumn Budget that buy to let property investors could be offered a capital gains tax break if they sell homes to current tenants.

Right-wing think tank Onward created the proposal that suggested landlords should not have to pay capital gains tax if selling to tenants who have been living in the property for at least three years. Onward has suggested that the £1.3 billion cost of the policy could be offset by limiting other tax breaks which buy to let investors benefit from.

Chancellor Philip Hammond is said to be considering the proposals ahead of the Budget, which will be announced on 29 October.

Currently, all buy to let investors who sell a rental property are liable to pay capital gains tax at 28 per cent on any profits they make. In contrast, under the Onward plan, landlords would be eligible for tax relief. The windfall would be split equally with the tenant, who could then use it as part of their mortgage deposit.

Onward has calculated that the average gain per property would be £15,000. A first-time buyer could therefore expect to benefit by £7,500. Regional variation was also considered, and a tenant in the capital could receive £19,500 under the scheme.

The Residential Landlords Association (RLA) made similar suggestions last year and is welcoming the current proposal with caution.

RLA policy director David Smith said: ‘Since then, a report by academics at Cambridge University for the RLA has argued that it is not clear whether a reduction in the rates at which capital gains tax is applied would incentivise landlords to sell their properties to sitting tenants. A more suitable approach would be a tax relief on rental income for the provision of longer tenancies with a refund on the stamp duty levy for additional properties where a landlord is prepared to sell a property to a sitting tenant.’

However, the RLA doesn’t support Onward’s calls for landlords to dis-invest from the sector. The RLA claims that through decreasing the supply of rental homes, young people would struggle to find housing with many forced to remain in the family home.

Be the first to comment on "Capital Gains Tax Break Proposal in Autumn Budget"

Leave a comment

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.

Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.