Chancellor hits landlords with a stealth capital gains tax raid

JEREMY HUNT’S stealth tax raid on landlords is set to leave property owners paying hundreds of pounds more when they sell up, according to analysis from the estate agency Hamptons.

The Chancellor announced a cut to the higher rate of capital gains tax (CGT) in the Budget, from 28pc to 24pc, but for most landlords the benefit will be outweighed by a reduction in tax-free allowances, a decision made in the Autumn Statement of 2022.

The annual capital gains personal allowance was cut from £12,300 last year to £6,000 this financial year and £3,000 in 2024-25.

It means the value of an investment property must rise by just £3,000 for a landlord to incur a tax liability when they sell and in effect means most will end up paying more to the state. All lower-rate tax-paying landlords will pay extra capital gains tax on property sales, Hamptons said, with an average extra bill of £1,674 compared with what they would have faced two years ago.

Almost nine in 10 higher-rate paying landlords will also be liable for a larger tax bill, with an extra liability of £454.

Aneisha Beveridge at Hamptons said: “Recent changes to CGT will hit landlords making the smallest gains hardest. Older investors who’ve been landlords for longer and have accumulated bigger gains are much more likely to benefit from the tax cut.”

Mr Hunt said he was cutting the higher rate to stimulate more market activity, adding: “These changes still leave us with more generous allowances than countries like Germany, Ireland, France and Canada.” Ms Beveridge

said: “Although he was hoping to encourage landlords to sell up and add new housing supply into the market for first-time buyers, the reality is that the tax changes as a whole will likely act as a disincentive.”

A Treasury spokesman said: “Capital gains tax changes made at spring Budget mean that more than 100,000 higher rate taxpayers will see their bills cut by £2,600 on average, encouraging sales and bringing more homes to the market.”

♦ Asking prices have jumped by more than £5,000 so far this month as calm in the mortgage market fosters more confidence in property values. The average price of a newly marketed house rose by 1.5pc to £368,118 in March, according to figures from Rightmove. That equates to a £5,279 increase, which markets the biggest rise in 10 months.