Capital Gains Tax receipts rocket as buy-to-let landlords offload property

Capital Gains Tax (CGT) receipts are rocketing as buy-to-let landlords sell off swathes of property as mortgage rates rise and house prices fluctuate, research from NFU Mutual reveals.

New figures from HMRC (main picture) reveal that the taxman collected £18.1 billion in CGT in 2022/23 – a huge £7bn more than two years previously – and means the public now pay more CGT than the hated Stamp Duty.

ROCKETING

Buy-to-let landlords offloading property are behind these rocketing receipts, which are set to continue as the CGT annual tax-free exemption has been slashed from £12,300 a year to £6,000 and is set to fall to £3,000 from April next year.

Sean McCann, Chartered Financial Planner at NFU Mutual, says: “There are several factors behind these huge increases.

“More buy-to-let landlords are offloading property because of increasing mortgage rates and are being hit based on the rise in the value of their property.

“With the value of the average UK property having increased by 75% over the last 10 years, many are facing substantial bills.”

CGT is paid when investors realise gains on shares or properties that aren’t their main residence and McCann says tax changes have led many landlords to bring forward the sale of their properties to benefit from a higher tax-free exemption.

TRAPS

He adds: “There are a number of CGT 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 Capital Gains Tax. 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.”