Verdict on the Capital Gains Tax (CGT) increase – it could have been worse
The emergency Budget’s increase in CGT from 18% to 28% for higher-rate taxpayers was not as bad as had been feared. In fact it is a return to levels similar to pre 2008.
George Osborne announced that the new higher tax rate on capital gains would apply immediately from Wednesday June 23. Before the Budget, many had feared that a 40% rate would be introduced from April 2011 because the coalition government had let it be known that it would tax non-business assets at rates “similar” to income tax. But such a move might have caused a sell-off of second homes and buy-to-let properties, and consequential price falls.
So the increase in CGT to 28% is actually a relief as it does not significantly affect purchase or sale decisions. The argument in favour of property investment is still strong, as capital gains of 28% still compare very positively with income tax of 50%.
A number of estate agents had reported a spike in instructions to sell ahead of the emergency Budget, with some 150% above the levels seen in May 2009 (although the abolition of Home Information Packs may have also affected this figure). Other estate agents reported more second homeowners transferring property to companies which have lower capital gains tax liabilities. And the reduced rates of corporation tax – also announced in the emergency Budget this week – could encourage high earners to use corporate entities for tax planning reasons.
Whatever your finance needs when investing in property, Largemortgageloans.com has a team of buy to let mortgage specialists with access to the whole of the market, including private banks who are often more flexible in their terms and more competitive in their rates than the high street banks. Whether you are arranging your first buy to let mortgage or looking to finance your buy to let portfolio, we can find the best deal for you.
For access to the best rates on interest-only high value mortgages, contact us now on 020 7519 4900 or request an online quote.
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on Tuesday, July 6th, 2010 at 11:45 am and is filed under Commentary.
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News & Views:
Verdict on the Capital Gains Tax (CGT) increase – it could have been worse
The emergency Budget’s increase in CGT from 18% to 28% for higher-rate taxpayers was not as bad as had been feared. In fact it is a return to levels similar to pre 2008.
George Osborne announced that the new higher tax rate on capital gains would apply immediately from Wednesday June 23. Before the Budget, many had feared that a 40% rate would be introduced from April 2011 because the coalition government had let it be known that it would tax non-business assets at rates “similar” to income tax. But such a move might have caused a sell-off of second homes and buy-to-let properties, and consequential price falls.
So the increase in CGT to 28% is actually a relief as it does not significantly affect purchase or sale decisions. The argument in favour of property investment is still strong, as capital gains of 28% still compare very positively with income tax of 50%.
A number of estate agents had reported a spike in instructions to sell ahead of the emergency Budget, with some 150% above the levels seen in May 2009 (although the abolition of Home Information Packs may have also affected this figure). Other estate agents reported more second homeowners transferring property to companies which have lower capital gains tax liabilities. And the reduced rates of corporation tax – also announced in the emergency Budget this week – could encourage high earners to use corporate entities for tax planning reasons.
Whatever your finance needs when investing in property, Largemortgageloans.com has a team of buy to let mortgage specialists with access to the whole of the market, including private banks who are often more flexible in their terms and more competitive in their rates than the high street banks. Whether you are arranging your first buy to let mortgage or looking to finance your buy to let portfolio, we can find the best deal for you.
For access to the best rates on interest-only high value mortgages, contact us now on 020 7519 4900 or request an online quote.
This entry was posted on Tuesday, July 6th, 2010 at 11:45 am and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.