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BTL landlord sales cause CGT intake to double in five years

  • 10/05/2023
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BTL landlord sales cause CGT intake to double in five years
The amount of capital gains tax (CGT) collected by HRMC in 2022/2023 came to £18.1bn, almost double the £9.2bn paid in 2018/2019, analysis has revealed.

A study of HRMC’s tax intake by NFU Mutual found that the figure was also £7bn more than in 2020/2021 when the amount came to £11.1bn and up on the previous financial year when £15.3bn was collected. 

Sean McCann, chartered financial planner at NFU Mutual, said there were several factors behind the increases such as buy-to-let landlords offloading property due to mortgage rates increasing and paying for the rise in the value of their asset.  

NFU Mutual said the CGT paid to HMRC could continue to rise now that the tax-free exemption has been more than halved from £12,300 a year to £6,000 and is set to drop further to £3,000 from April 2024. 

McCann added: “This led many landlords to bring forward the sale of the property to benefit from a higher tax-free exemption. 

“Volatility in the stock market with large fluctuations and higher interest rates available on cash will have encouraged some investors to sell shares, realising gains that would have been taxed.” 


Set to keep rising 

The Office for Budget Responsibility (OBR) has forecast that CGT intake will amount to £17.8bn in 2023/2024, then rise to £19.5bn the following financial year. It is expected to continue steadily rising and reach £26.1bn by 2027/2028. 

McCann said: “The Chancellor has already slashed the annual exemption, which means the tax take will continue to climb. 

“Increasing the rates to align them to income tax has recently been mooted, but this government is unlikely to do that before the next election.” 


Unexpected liability 

McCann said people were also being caught out because they were unaware that CGT also needs to be paid on gifts. 

He added: “There are a number of capital gains tax traps that people unwittingly fall into. Most notably, few people realise giving away property, shares, or other investments can trigger a tax bill.  

“For example, if a parent gives property or a portfolio of shares to their children, that’s deemed to be a disposal and could be liable for CGT. It’s also possible the gift could be hit with a subsequent inheritance tax bill if the person making the gift dies within seven years.”   

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