Healey urged to overhaul Capital Gains Tax
Ben Beadle, of the NRLA, says it is absurd that property owners taxed on value gains due to inflation.
Landlord leaders are calling on Chancellor John Healey to overhaul Capital Gains Tax in his Budget next week.
Action is needed to ensure property investors are not taxed on increases in value due to inflation, the NRLA insists.
Chancellor John Healey is not expected to raise Capital Gains Tax (CGT) significantly in his first Budget, which had been a fear of property owners.
There had been calls from some senior members of the Government to bring CGT rates in line with Income Tax levels, which would have hit landlords looking to sell.
Discourage investment
But the current tax system discourages investment because it cannot distinguish between genuine gains and price increases resulting from inflation, the NRLA says.
Ben Beadle, Chief Executive at the NRLA (pictured), says: “All regions of this country desperately need more homes to rent, yet our tax system fails to encourage landlords to make long-term investments to provide them.
Absurd
“It is absurd that investors face Capital Gains Tax on increases in property prices that are simply the result of inflation. That’s not a real gain, and it shouldn’t be treated as one.
The Chancellor has an opportunity to put this right.”
“The Chancellor has an opportunity to put this right. A fairer Capital Gains Tax system that recognises inflation and rewards long-term investment would help rebuild confidence in the sector and support the supply of rental homes.”
Between 2015 and 2024 just one-fifth of the increase in house prices represented real-terms gains, the NRLA says, with the remainder attributable to inflation.
To create a fairer system, the NRLA proposes that CGT should apply to genuine gains, not gross increases in property values. Where a property is bought and sold speculatively over a short-term no relief would apply.
