An interesting article published today by landlordzone :-

The Chancellor is expected to leave the rate of capital gains tax (CGT) on the sale of second homes and buy-to-let properties untouched amid concerns that increasing it would cost money.

Landlords fear Rachel Reeves’s plans for up to £40 billion worth of tax rises and spending cuts could include property transactions but according to The Times, a government source insists she will use her budget to focus instead on capital gains on profits from the sale of shares, which is currently levied at a higher rate of 20%, by increasing it “several percentage points”.

The claim comes despite an influential new report from centre-left thinktank IPPR which explains that low CGT rates are poor value for money as they “equally reward passive asset ownership and active entrepreneurship”.

Property portfolio

“UK house prices have appreciated by around 54% since 2014,” it says. “Someone who owned a property portfolio since then could do nothing with their assets and sell them today for a significant gain.

"A gain of £1 million made passively over 10 years generates a tax bill half the size of someone who earned £100,000 a year over the same decade. The current system unfairly rewards those who already own assets over those who contribute productively to the economy through work. This also creates significant ‘deadweight’ costs to the Treasury.”

The report recommends equalising CGT rates with income tax rates which would entail a rate of 20% for basic rate income taxpayers, 40% for the higher rate, and 45% for the additional rate.

Millionaire business owners interviewed by IPPR urged the government to raise £14 billion from an increase in CGT, arguing it would have no impact on investment in Britain. The wealthy investors said increasing the tax rate on asset disposals would help to raise vital funds for public services and would not lead to slower economic growth.

The report showed entrepreneurs were more focused on issues including access to financing, market opportunities, and broader economic conditions.