Buy-to-let investors let off the hook
A collective sigh of relief went round the country as the new Chancellor let small buy-to-let investors off the hook.
Stories were rampant of landlords with large buy-to-let portfolios off-loading their properties to avoid the rumoured increase of capital gains tax (CGT) from 18% to 40 or even 50%.
On 22nd June 2010 George Osborne's inaugural budget didn't touch the rate paid by basic tax rate payers. It remains at 18%, mollifying the fears that small buy-to-let investors, those for whom buy-to-let insurance and other expenses can really hit the bottom line, would be hardest hit.
But CGT wasn't left alone completely. Determined to raise cash to offset the budget deficit inherited from the global economic meltdown and the previous Labour government, the Chancellor added ten points to higher-rate taxpayers CGT. This means people subject to higher tax rates will pay 28% rather than 18%, a change that was implemented immediately.
Many buy-to-let insurance payers will see this as the thin end of the wedge. Expectations are that subsequent budgets will whittle away at the disparity between tax levied on earnings and that earned on capital and long-term investors will shy away from buy-to-let.
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June 25th 2010