Industry news

Buy-to-let landlords could face shorter deadline to pay capital gains tax

The consumer protection magazine Which? is warning landlords and second-home owners they could be required to pay capital gains tax within 30 days of selling their properties, under new rules being proposed by the Government. Currently sellers of second homes or

investment properties can postpone paying capital gains tax (CGT) until they file their tax return for that tax year, which could be more than 18 months after the property is sold. But draft legislation will mean property investors have just 30 days to pay up. CGT is payable when people sell a valuable

asset like a second home or a buy to let property for a profit. People can earn £11,700 (or £23,400 for couples who pool their allowances) before paying tax. Above this, basic-rate taxpayers have to pay 18 per cent of any gain on property, and higher rate taxpayers pay 28 per cent. Under the current rules, landlords must

pay CGT for property sales by 31 January after the end of the tax year, at the same time as their self-assessment tax returns are due (for online filings). So, if they sold an investment property in July 2018, it would be taxed within the 2018-19 tax year, and the landlord could wait until 31 January 2020 to pay the bill. But under the new rules, people will need

to pay up within 30 days of the sale going through. For some landlords, this could move up their payment date by more than a year and a half and cause problems with their cash flow. This follows a number of other tax reforms that have pushed up bills for landlords, including the scaling back of mortgage interest relief, and the introduction of a stamp duty surcharge on buy-to-let and second homes.

The new rules have not yet been confirmed, as the draft legislation is currently passing through Parliament

The change was originally due to come into

effect in April 2019, but the proposals have been delayed and are likely to take effect for property disposals on or after 6 April 2020.

Think tank calls for an end to deposits on private rentals

damage and future payments of rent, should be replaced by an insurance scheme. In his new report ‘Down with deposits’, Brian


Sturgess proposes that the Government should promote a deposit replacement insurance system as an alternative. This would allow renters to insure against potential damage or missed rent payments without having to find a large up-front deposit, currently estimated to average around £1,041. Such insurance schemes could easily be

developed within the existing insurance market and they would allow renters to keep more of their own money when moving into a rented property. It would avoid them having to borrow money to gather enough funds for a deposit. This would be particularly useful for the 31 per cent of private renters who have less than £100 in the bank. An insurance-based model would also allow

renters to build up a reputation as a good tenant through a ratings system similar to no-claims bonuses for motor insurance, while ensuring that landlords received protection against property damage and missed rental payments. The report has been published by the Centre for

Policy Studies. Another benefit of the proposal is that an insurance-based model would significantly improve the lives of ‘Generation Rent,’ but at no cost to the Treasury. In the report Brian Sturgess said: “Many people

are simply unable to enter the rental market due to the need for a large upfront deposit to be provided before they move in. These proposals offer a

18 | HMM September 2018 |

property expert is proposing that the deposit system used in the private rental sector for protecting property from

Polling by YouGov has shown that 43 per cent of renters would support a deposit replacement insurance system with a small cost, rather than the current system of tenants paying large upfront deposits

solution to the inherent unfairness of renters losing out on the interest they would have accrued on such a deposit, and often having to struggle to get their money back at all.” Polling by YouGov has shown that 43 per cent of

renters would support a deposit replacement insurance system with a small cost, rather than the current system of tenants paying large upfront deposits. The report finds the average renter loses over

£300 per tenancy due to lost interest and inflation because of forced participation in the existing deposit protection schemes. Forcing tenants to pay large up-front deposits

means many people struggle to move between properties. They also lose out on earning interest on their money which instead is retained by their landlord or letting agency, and they often face a struggle to get all their money back.

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52