Chancellor Rishi Sunak has requested a review of Capital Gains Tax rules from the Office for Tax Simplification – leading to speculation it may be the start of higher CGT on buy to let investments.
The OTS has published an online survey and a “call for evidence” to seek views regarding CGT, with the consultation closing on October 20.
This would mean new CGT rules, taking into consideration the consultation, could be presented at the autumn Budget expected in November.
According to the Treasury the consultation aims to “hear directly from individuals and businesses” as well as “professional advisers and representative bodies” about which aspects of capital gains tax are “particularly complex and hard to get right, and to hear any suggestions for improvements”.
Recently the influential Institute for Public Policy Research think tank called on government to tighten CGT on buy to let properties and second homes.
CGT has traditionally been lower on investment properties and other activities because they involve risk-taking, while heavier taxed income from employment and savings interest reflect their much lower risk.
However, CGT is already 10 per cent higher for the sale of buy to lets and second homes – at 18 per cent and 28 per cent for basic and higher rate taxpayers – than it is for investments.
In April HMRC changed its rules requiring UK residents to submit CGT returns, as well as pay any CGT due, within 30 days of completion of the sale of residential property – typically an additional home.
Previously, individuals under self-assessment could instead report the sale and pay across their liability through their next annual tax return.
This post has originally been featured in Letting Agent Today.