A recent survey conducted by Finbri revealed that 45% of landlords in the UK are either “strongly concerned” or “concerned” about the upcoming changes to capital gains tax (CGT) allowances, set to be implemented this April.
The tax-free allowance will decrease by more than 50%, potentially impacting landlords’ investments.
Currently, CGT is charged at either 18% or 28% on profits made when selling assets such as property or shares, depending on an individual’s total taxable income.
In November 2022, the Chancellor announced that CGT allowances will be reduced from April 2023, with further reductions planned for April 2024.
Starting April 2023, the annual CGT tax-free allowance of £12,300 will be cut to £6,000, and will further drop to £3,000 in 2024, marking the lowest allowance in over four decades.
Stephen Clark from Finbri, a specialist property finance broker, noted that the new CGT rate, along with other tax changes like restrictions on mortgage interest relief and stamp duty increases, will significantly impact landlords and investors’ profitability when selling properties.
He said: “The new CGT rate, coupled with other tax changes that have been introduced in recent years such as the restriction on mortgage interest relief and stamp duty increases, will significantly impact profitability for landlords and investors when they come to sell their properties.
“The private rental market is vital in the broader UK housing market. It provides accommodation for those unable to get on the property ladder and landlords with an income. But with increasing rates and the looming impact of CGT rates changing, landlords are under significant pressure, with many looking to leave the market altogether.”
