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Labour tax proposals final nail in the coffin of buy to let – warning
Two specific elements of Labour’s tax proposals, outlined in its manifesto, could “drive a nail into the coffin of buy to let” warns a leading financial adviser.
The first is Labour’s commitment to capital gains being taxed at the same rate as income; this could sharply increase the tax paid by landlords when they sell their properties.
Income tax is currently at 20 per cent for basic rate taxpayers, 40 per cent for higher rate taxpayers, and 45 per cent for additional rate taxpayers.
Labour also plan to introduce a holiday home levy worth the equivalent of 200 per cent of the current council tax bill for the property.
Now NFU Mutual is warning that these measures could add to the woes felt by buy to let investors after a series of fiscal changes introduced already by the Conservative governments of recent years.
“Capital gains tax receipts have more than doubled in the past five years as a result of people selling buy to lets due to the onerous tax treatment. Landlords are being caught in a very effective pincer movement from the taxman” warns the company’s chartered financial planner, Sean McCann.
“From one side, the higher rate tax relief on mortgage interest is gradually being phased out, making letting out properties less profitable. From the other side, landlords looking to sell buy to let properties are being squeezed with an extra eight per cent capital gains tax.
“This trend is likely to continue as many of those who have invested in property for their retirement will be tempted to turn to pensions because of the tax benefits.”
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Original Source: Letting Agent Today.
Original Author: Graham Norwood.
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https://www.lettingagenttoday.co.uk/breaking-news/2019/11/labour-tax-proposals-final-nail-in-the-coffin-of-buy-to-let–warning
