The Chancellor Jeremy Hunt halved the threshold for paying capital gains tax (CGT) from £12,300 to £6,000. This will take effect from April 2023.
There will be a further cut to the threshold in the 2024/2025 tax year when CGT will be payable on profits of £3,000 or more.
The move will impact anyone who has a second home or who owns a property on a buy-to-let or as an investment.
CGT is payable when people sell or gift certain items worth more than £12,300 ( £6,000 from April) such as antiques or art, or assets including second homes and shares held outside of an ISA or PEP.
CGT brought in £14.3 billion in the 2020-21 tax year, from 323,000 people.
Chris Liebetrau, financial planner at Nutmeg, the digital wealth manager, said: “Anyone who is concerned they may be liable to pay capital gains tax may wish to consider timing the ‘disposal’ of their assets or alternative forms of ownership, for example holding buy-to-let investments in a limited company structure.”
What impact will CGT hike have on renters?
There are fears the tax hike will lead to more landlords selling up before the change is introduced in April.
With many landlords already concerned about their investment because of energy efficiency rules, this latest challenge could be the trigger to sell.
For renters this would mean reduced supply and higher rents.
Kevin Roberts, managing director, Legal & General Mortgage Services said: “The new changes to capital gains tax, will add further pressure to landlords and we are likely to see more rental properties put up for sale.
“A greater supply of housing for buyers will definitely be welcomed by some, but this could prove a painful development for renters. The rental market is already suffering from a lack of stock and rising rents.
“This is an area of the market that needs more government attention and this latest Budget offered little in the way of relief for renters worried about the cost of living this winter.”
