After much anticipation, speculation and fear regarding the increase of capital gains tax (CGT), buy-to-let investors were somewhat relieved at the UK government?s Budget decision for a relatively low 28 per cent. This is much lower than many projections, some of which feared as much as 50 per cent CGT.
Chancellor George Osborne further revealed that basic-rate taxpayers would not see any increases, retaining their existing 18 per cent flat rate. The annual ?10,100 exemption allowance will also remain.
The 28 per cent rate will apply to earners with a combined income and gains exceeding ?54,975 after the exemption is factored in.
While the increase is far better than the initial indications, critics such as Russell Hills, the head of tax at KPMG in Scotland, still feel that it makes the UK?s taxpayer rate one of the highest in Europe, with the increase only sounding good ?? because people were fearing a 50 per cent rate?.
On the other hand, there are those who do not believe that the UK property market will not be adversely affected. Stuart Law, the chief executive of Assetz, told the Business Scotsman: ?This move is not likely to have a negative impact on the UK property market, as speculative investors are unlikely to sell off their buy-to-let property once this new tax rate is introduced at midnight tonight.?
Even with the final decision made, it seems that speculation surrounding the issue has not settled. Time will reveal the exact effects of the increase on the UK property market in general and the buy-to-let housing sector in particular.
