Wigan Landlords and Capital Gains Tax

The government has borrowed £394bn this financial year, April ‘20 to April ’21.

This figure does not include the cost of the November lockdown which means the final bill will probably be over half a trillion pounds.

Ultimately, these billions will need to be paid back to cover the cost of Coronavirus.

One suggestion in discussion is increasing the rate of CGT for selling a buy to let property from 28% to 40% for high-rate taxpayers and 45% for additional rate taxpayers. To add salt to the wound, there is also a suggestion of cutting the £12,300 annual CGT allowance.

With tax bills about to go through the roof, is it time to

leave the Wigan buy to let property market

However, Wigan landlords may well finish up having lower CGT tax bills with these new taxation proposals.

This is because it is also being suggested all gains made before 2000 would not be taxable (rebasing) and any capital gains would be calibrated to account for inflation.

So, what would that actually look like for a Wigan landlord ?

Let us assume we have a Wigan landlord who bought a Wigan buy to let property in 2000.

Under the current CGT rules

• The average value of a Wigan property in 2000 was £59,100

• Today, that same Wigan property has increased in value to £173,100

• Meaning a profit of £114,000

• As our Wigan landlord is a high-rate taxpayer (earning £60,000 a year), their CGT bill would, after the annual allowance, be £28,476

Under the new proposed CGT rules

Under the new proposals, the CGT payable (assuming the CGT rate of 40% and a lower annual allowance of £5,000) the same Wigan landlord would only pay £21,887 – a saving of over £6,500.

And the savings don’t stop there. Remember, under the new OTS proposals, all capital gains made before 2000 would also be tax-free.

However, let us not forget these are only suggestions on how to simplify taxation opportunities. They have not been adopted by Rishi Sunak as Government policy yet.

But it is also fair to assume that Landlords and 2nd Home Owners are unlikely to escape the Chancellors spotlight when it comes to repaying our debts

You have to remember, CGT only gets charged when you sell, and the Wigan Rental Market is paying much better returns than savings accounts or government bonds.

Have you had your portfolio valued recently ?

Are you sure you are obtaining the best possible market rent ?

Please contact us anytime if you need any help or advice on your rental investments, whether you are one of our landlords or not.

01942 233999 #Wigan #Landlords #Lettings #Taxation