Treasury makes no changes to CGT but landlords warned to prepare

Treasury makes no changes to CGT but landlords warned to prepare

 

In previous years taxation documents would be published alongside the Budget, but this time around the Treasury opted to publish them separately after the speech as part of a tax day.

There had been speculation documents would include possible changes to CGT, particularly after the Office for Tax Simplification was asked to investigate last year.

It later published its own recommendations for sweeping amendments to the tax.

However, as in the Budget earlier this month, landlords and others impacted by Capital Gains Tax have escaped so far.

Neil Cobbold, chief sales officer at PayProp, said it was “a surprise not to see a consultation launched as part of the government’s tax day”.

“The Office for Tax Simplification recently calculated that doubling CGT rates and lowering the Annual Exempt Amount could raise an additional £14bn for the Treasury each year,” he said.

“CGT is paid by relatively few people – around one per cent of taxpayers last year. However, landlords are hit when they sell properties, so an overhaul would have an outsized impact on the rental market.

“Residential properties already attract a higher rate of CGT than other investments, further adding to the tax burden.”

He added that although no consultation was announced today, letting agencies and landlords should continue to prepare for changes to the CGT system in the future.

The relief paid on pension tax contributions was also predicted to be included in the slew of consultation documents.

It led to a host of financial observers describing tax day as a “damp squib”.

However, measures included in the documents include a clampdown on holiday lets, measures to remove red tape from inheritance tax reporting, and a push to tackle tax avoidance.

 

Behind the scenes changes

Rachel Griffin, head of trusts and technical solutions at Quilter, suggested the Treasury had “focused on behind the scenes changes to improve the administration of the tax system” rather than announce headline changes.

The Treasury is also looking at extending its making tax digital programme to include self-employed workers from 2023.

The programme, which has already launched for larger VAT registered businesses, requires taxpayers to make more frequent payments rather than settling their bill once a year.

Jason Hollands, managing director of Tilney BestInvest, said that ‒ for now at least ‒ the panic about sizeable personal tax raids was over.

However, with the various tax allowances set to be frozen for the next five years, he noted that increasing numbers would be drawn into paying more tax anyway.

Hollands added: “This is going to become progressively more painful if inflation rears its head again as the markets are expecting. People should therefore make best use of existing allowances while they can – a timely reminder with the end of the current tax year just days away.”