Capital Gains Tax: An Open Letter to Rishi Sunak
Dear Rishi Sunak,
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As a company dedicated to serving landlords, we can’t help but feel that your plans to reform Capital Gains Tax will leave many feeling the pinch, despite the fact they have served the housing market so well. While we understand that the unprecedented coronavirus pandemic has left the Government looking for ways to boost finances, we believe that targeting a vital component of the UK’s housing market isn’t the answer.
Landlords were already walking on eggshells in a sector that has increased stamp duty and phased out tax relief. Coupled with spiralling property prices, they have continuously found themselves swimming against the tide. An increase of Capital Gains Tax from 28 per cent to between 40 and 45 per cent for higher rate and additional rate taxpayers would be the final nail in the coffin.
This year, reports revealed that the private landlord sector has already shrunk to a seven-year low. If the market sees a mass exodus of landlords as a result of CGT, the UK’s housing crisis will only worsen. Landlords provide vital housing at a time when demand far outstrips supply. If the private rental sector were to reduce further, the pool of available rental properties would decrease, thus causing further issues for all involved.
The property market has performed relatively well despite the pandemic. Yet, it’s still in need of vital support to ensure that people can move home, both in the sales and rental market. Demanding even more from landlords will have a detrimental impact on the UK’s housing market.
Right now, the housing sector needs solutions to boost its capabilities; not plans that will limit it further.
The Stamp Duty Holiday was one clear step forward, but any increase to Capital Gains Tax will likely result in two steps back.
Increasing the CGT isn’t the answer in our opinion, and we believe it’s time the Government viewed landlords with more value and respect.