Large scale increases in and changes to the Capital Gains Tax regime could seriously hurt the housing market, a senior figure has warned.
David Alexander, joint managing director of digital property management platform Apropos, says he is concerned that Chancellor Rishi Sunak has asked the Office of Tax Simplification to review the CGT regime.
The scope of the review specifically calls for an examination of CGT and its use in the ‘the acquisition and disposal of property’ and ‘the practical operation of principal private residence relief’ which means that individual homeowners, landlords and investors could all be seriously affected, warns Alexander.
“While this is only a review and may result in no changes to CGT, it is clear that the Chancellor sees potentially rich pickings among the wealth accumulated in property” he says.
“He needs large amounts of money to fund the government response to coronavirus and one of the easiest targets is always property as it can’t be hidden, and it can’t be taken abroad. However, to tax the value accumulated in an individuals’ home would surely be political suicide. Therefore, the assumption must be that he is looking for income from second homeowners, landlords and property investors.”
Yesterday Estate Agent Today reported growing speculation that Sunak was going to defy expectations and levy CGT on the profits made by owners from some main homes.
Alexander continues: “It is important, at this difficult time, to develop strategies to pay for the pandemic which both encourage economic growth whilst also increasing government revenues.
“Raising CGT rates feels like a move that would stifle growth, discourage investment, and depress the housing market. I think people need to feel they have an asset that is worth something and property has always been a particular British obsession.
“To put a cap on that value may disillusion many.”