A leading accountancy and business advice consultancy says residential landlords who want to downsize their portfolios because of recent tax changes should be incentivised to do so - and make more homes available to buy, as a result.
Bishop Fleming says the Budget on November 22 is an opportunity for government to make it easier for landlords who have been hit by the stamp duty surcharge, phasing out mortgage interest relief and reform of Wear and Tear Allowance, to sell up.
"These recent changes are designed to hit private landlords, but what the government has not done is to make it easier for those landlords to downsize their portfolios, or leave the sector completely, without incurring massive tax penalties; it has been all stick and no carrot from the Chancellor" says Bishop Fleming's head of tax, Andrew Browne.
"Landlords face a Capital Gains Tax bill of up to 28 per cent on any gains they make on the selling of properties, without any relief for the time a property has been held, or for inflation" he adds.
Browne says that in the past, any gains would have been tapered depending on the length of ownership and any increase in value purely through inflation would have been removed with an indexation allowance.
However, both these reliefs have been removed by successive governments, though indexation relief continues to be available to companies.
"The removal of taper and indexation reliefs has created a punitive retrospective tax on private landlords who may have bought their properties many decades ago. Inflationary pressures are outside the control of landlords, so it is unfair that they should not get some measure of relief from gains that have arisen simply through inflation” Browne continues.
He is suggeasting these reliefs could be reintroduced, alongside some further measures such as giving residential landlords the same access to ‘roll-over' relief that other businesses enjoy to allow sale proceeds to be reinvested to defer a large tax bill, or to widen the scope of Entrepreneurs' Relief that reduces the CGT rate to 10 per cent.
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Those latest modifications are designed to hit private landlords but what the government has no longer executed is to make it easier for those landlords to downsize their portfolios. The removal of taper and Buy Coursework Online indexation reliefs has created a punitive retrospective tax on non public landlords who may also have sold their houses many decades in the past.
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