In partnership with local authorities in England the Chancellor announced the Government will help to implement a council tax freeze in 2011-12.
Capital gains tax will rise from 18 to 28 per cent for those liable to income tax at the higher and additional rates. The 10 per cent rate for entrepreneurial business activities will be extended from the first £2 million to the first £5 million of qualifying gains made over a lifetime.
In other announcements designed to tackle tax avoidance the Government says that it intends to examine whether further changes to the rules on stamp duty land tax on high value property transactions are needed to prevent avoidance in this area.
Stuart Law, Chief Executive of Assetz said of the proposed CGT changes:
“Osborne’s Capital Gains Tax increase to 28% remains lower than the rates we had three years ago, of up to 40%, before Labour introduced the 18% rate. This move is not likely to have a negative impact on the UK property market as speculative investors are unlikely to sell off their buy to let property once this new tax rate is introduced at midnight tonight. Professional property investors are generally looking at the long-term benefits and see the importance of the regular income rather than short term capital gains.”
Jonathan Moore of easyroommate.co.uk said:
“House prices have continued their upwards trajectory in 2010, and thousands of buyers cannot afford to get a foot on the housing ladder as a result. With potential public sector job losses on the way in the autumn and the inevitable negative impact the VAT hike will have on businesses, the affordability gap is only set to worsen. We will see increasing demand for rented accommodation.
"The good news is that, while a Capital Gains Tax increases may be bad news for many professional landlords, live-in landlords have emerged unscathed. In fact, they should see an increase in tenant demand in the short-term. With social housing likely to be in the firing line for future funding cuts, and investment in the private rented sector via buy-to-let likely to feel the effects of a higher Capital Gains tax, flatsharing will play an vital role in the housing market, providing affordable accommodation for the UK’s growing population.”
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