Save content
Have you found this content useful? Use the button above to save it to your profile.
Lowdown
AccountingWEB

9am Lowdown: Buy-to-let investors feel CGT bite

by
28th Oct 2016
Save content
Have you found this content useful? Use the button above to save it to your profile.

Good morning and welcome to Friday’s 9am Lowdown.

* * *

Buy-to-let investors feel CGT bite

As Capital Gains Tax jumps to 22% in year, soaring house prices are leaving buy-to- let investors “exposed to significant CGT bills”, warns UHY Hacker Young.  

UHY Hacker Young reported this being the second large rise in CGT yields in the past two years. HMRC receipts from individuals stood at £3.5bn in 2012-13.

Mark Giddens, partner and head of UHY Hacker Young’s London private client team raised concern over how more buy to let investors are being dragged into CGT with each passing year.  “In recent years, it hasn’t been uncommon for buy-to-let investors to see their properties appreciate by £50,000 or £100,000 in a relatively short period as property prices have risen sharply in London and the South East,” he said.

“Those gains would have been taxed at 18% a few years ago, but the changes to the system in 2010 mean that more of them are now taxed at 28%.”

* * *

HMRC stops contracted out ‘front of house’ work

HMRC will not contract out “front of house” work, Chief executive Jon Thompson has pledged following the Revenue’s decision not to renew the contractor company Concentrix’s contract.  .

According to the Independent, Thompson confirmed to the Treasury Select committee yesterday that the work previously undertaken by the outsourcer will be taken back in house.

Thompson said: “We will not be going back to the market for this kind of work. We will not be going back to the market to seek a third party to help us in any way with the tax credits system.”

* * *

Companies raise record funds throuh investment schemes 

3265 companies have raised £1.8bn of funds under the Enterprise Investment Scheme (EIS) and 2,290 companies raised £175m through the Seed Enterprise Investment Scheme in 2014-15 reports to RSM.

A record number of smaller high risk companies have benefitted with a funding boost under these schemes, with EIS rising 14% on the previous year. But RSM reports a regional imbalance with companies in London and the South East receiving 65 per cent of EIS investment. By contrast, companies in the North East received less than 1% over the same period.

Rob Donaldson, RSM’s head of corporate finance said: “In the current era of financial repression, with yields across all asset classes being crushed by the impact of unconventional monetary policy, there is clearly a growing appetite among investors for higher risk, higher reward investments and the tax reliefs on offer via these schemes are proving to be very popular.”

 

Replies (5)

Please login or register to join the discussion.

Danny Kent
By Viciuno
28th Oct 2016 12:53

"As Capital Gains Tax jumps to 22% in year, soaring house prices are leaving buy-to- let investors “exposed to significant CGT bills”, warns UHY Hacker Young"

These poor people. Imagine having your mortage paid by some poor sucker on low wages since you bought the property and then finding that when you want to sell (having made more in capital gains than the tennant has probally earned since moving in - most likely working long hours while you watch your bank balance grow) that you need to pay tax! Probably to pay for the housing benefit which is paid to your tennant - as you buying several houses in the area with your well-off friends has inflated the housing market to such an extent that the people living and working there can't afford it.

What is this country coming to.

Thanks (7)
Replying to Viciuno:
avatar
By kjevans
31st Oct 2016 11:28

You mean having supported several tenants who probably failed to pay their rent and trashed the property, having dome all those little tasks that home owners do for themselves like unblocking sink wastes and so on, and then finding that you can't deduct the cost of providing the property from your profits any more (the mortgage -S24 of the finance act), you decide to bail out and let some unrelated first time buyer have the property (no one would give a mortgage to many people who rent). Then you discover that the meagre increase in value is going to be taxed at 28% - of course, if you are in the North, there's probably no CGT as prices haven't risen. Be happy when your Council Tax is spent on keeping ex-tenants in Travelodges.

Thanks (1)
Replying to Viciuno:
avatar
By kjevans
31st Oct 2016 11:28

You mean having supported several tenants who probably failed to pay their rent and trashed the property, having dome all those little tasks that home owners do for themselves like unblocking sink wastes and so on, and then finding that you can't deduct the cost of providing the property from your profits any more (the mortgage -S24 of the finance act), you decide to bail out and let some unrelated first time buyer have the property (no one would give a mortgage to many people who rent). Then you discover that the meagre increase in value is going to be taxed at 28% - of course, if you are in the North, there's probably no CGT as prices haven't risen. Be happy when your Council Tax is spent on keeping ex-tenants in Travelodges.

Thanks (0)
Replying to Viciuno:
avatar
By evildrome
31st Oct 2016 15:28

I find it unbelievable that in this country, honest asset owning citizens are asked to pay tax. And at an signification fraction of what the proles pay on "earned" income.

It is a scandal.

I shall write to the Queen!

Thanks (0)
By Ruddles
28th Oct 2016 19:44

So what it really means is that "it hasn’t been uncommon for buy-to-let investors to see the net-of-tax value of their properties appreciate by £36,000 or £72,000 in a relatively short period". That'll do nicely - stop complaining.

Thanks (3)