Originally published in September 2024 , rewritten for 2025

CGT and Inheritance Tax

A tattoo? Major surgery? The loss of a loved one? The nation has been warned to expect something ‘painful’ but instead of a traumatic incident, the Prime Minister has stated the Autumn Budget will hurt.

With Labour claiming the state of our country’s financial affairs is worse than anticipated, the Government wants to generate new income to plug a reputed £22 billion black hole. In the firing line are set to be anyone with assets – including landlords.

Although one of Labour’s manifesto pledges was to avoid VAT, National Insurance and income tax hikes, the Government has identified other ways to squeeze more money out the masses – namely an increase to both Inheritance Tax (IT) and Capital Gains Tax (CGT).

The news of even more tax to pay has left many landlords reeling and changes to IT are a worry for landlords – especially those with a property portfolio who want to hold on to their assets retirement as a source of income in retirement.

At present, 40% IT is payable on the value of an estate that exceeds £325,000. The nil rate threshold was last increased in April 2009, when the UK’s average house price was £155,852. Today, in August 2024, the Nationwide says the UK’s average home costs £265,375. That value, together with other assets, will make thousands more liable for IT when they die.

The Government could tinker with IH in a number of ways: they could lower the £325,000 nil rate threshold; they could increase the 40% tax rate or they could scrap some IT reliefs, such as being able to pass on an unused nil rate band to a spouse. There’s nothing stopping the Government from doing all three!

Speculation is also rife that the Government could lift the CGT rate to fall in line with income tax brackets. If introduced, new higher rates of tax at 40% and 45% for the highest earners may be introduced – with substantial amounts of profit being swallowed up in tax upon sale. The Chancellor could also lower the capital gains tax-free allowance, which is now just £3,000.

Anecdotal evidence suggests the ‘phones of financial advisors, tax planners and estate agents are already ringing off the hook, even though the industry is working off assumptions. For many landlords, a change to IT and/or CGT (a double whammy is possible), will be the straw that breaks the camel’s back.

A high number of landlords will have struggled since the end of mortgage interest tax relief and the scrapping of tenants’ fees. Others are fearing how the Renters’ Rights Bill will reform private lets, with Section 21 banned, the minimum EPC requirement lifted to C and a new Decent Homes Standard.

As such, the great asset disposal has begun. Our team at LandlordBuyer has already been talking with landlords about how to exit the market and avoid crippling tax rises. With the Budget looming, there is a real time pressure to have completed on a sale before a change to CGT comes into effect.

Risking the open market is not an option for all landlords, especially those with tenants in situ, with sales taking almost 200 days from offer to completion. Even for those who start a buy-to-let-sale on the open market today, there is no guarantee completion will be reached before a possible CGT increase.

A fast cash property sale to LandlordBuyer is a great option for worried investors, as our average ‘offer to completion’ time frame is running at 6 weeks. Our service is excellent for landlords who want to beat any GCT deadline and for those selling a tenanted property.

The Autumn Budget will be delivered on 30th October 2024 - LandlordBuyer will be listening carefully so we can best advise landlords and portfolio owners. If you are worried about how the Budget - including changes to CGT and IT may affect you – don’t hesitate to contact us for asset management and property disposal advice.

« Older item Back Newer item »

Get your free CASH offer and enter your details for an instant, no obligation offer for your property
Please search for the address of the property you wish to sell, not your home address Got it