![Pinterest](https://pinterest.com/pin/create/button/?url=https://uknews.evprotec.com/landlords-face-extra-1800-bill-in-capital-gains-tax-raid/&media=https://uknews.evprotec.com/wp-content/uploads/2022/11/TELEMMGLPICT000315741704_trans_NvBQzQNjv4BqNUHzxaamNmHDqK-YksWRz2o-yMLyYquKCawpyDOW254.jpeg&description=Higher-rate taxpayers pay capital gains tax at 20pc, but at 28pc on residential property. The respective rates for basic-rate taxpayers are 10pc and 18pc. If the tax-free allowance falls to £6,000, a higher-rate taxpayer selling residential property will pay 28pc on the difference – meaning an extra £1,764 if the profits exceed £12,300. For basic-rate taxpayers, the capital gains tax rate on residential property is 18pc, meaning a drop in the threshold to £6,000 would cost up to £1,134. Chris Etherington, of RSM accountants, said: 'A halving of the capital gains tax annual exemption will be seriously bad news for homeowners and landlords.' He added: 'At a time when homeowners are likely to find it harder to sell their property, we could find more people becoming accidental landlords as we did after the financial crash, forced to rent out their homes in the meantime. 'When they eventually sell, they could find they are stung with a capital gains tax bill on the sale which would have otherwise been exempt." In the 2021-22 tax year, 129,000 taxpayers filed returns to report capital gains on residential property. Across 141,000 property disposals, the sale profits totalled £8.4bn – an average capital gain of £59,758 per transaction. This means that under Mr Hunt's plans, a typical landlord or second homeowner will have to pay the full extra £1,764. Except the extra bill could be even higher, as Mr Hunt is also reportedly considering raising the rates. A 2020 report by the Office of Tax Simplification recommended that the Government 'consider more closely aligning capital gains tax rates with income tax rates'. If Mr Hunt aligned capital gains tax rates with income tax and cut the tax-free threshold to £6,000, a landlord selling a property with a capital gain of £60,000 would have to pay up to £21,600 in capital gains tax. This would be a jump of 62pc compared to the £13,356 tax bill they would pay with a tax-free threshold of £12,300 and a 28pc capital gains tax rat){kind=link}
Buy-to-let to be hardest hit under Chancellor Jeremy Hunt’s plans to cut the tax-free allowance
Landlords and second home owners will have to pay almost £1,800 extra in tax when they sell their properties under Government plans to cut the capital gains tax-free allowance.
Chancellor Jeremy Hunt is considering halving the £12,300 tax-free allowance for capital gains to £6,000.
The plans, reported in the Daily Mail, would mean hundreds of thousands of property owners will have to pay more tax when they sell.
Capital gains tax is charged on profits when an asset is sold or gifted. Mr Hunt’s plans will also hit anyone selling shares or disposing of business assets.