Lincolnshire based accountants Moore Thompson are advising buy-to-let property owners to review their situations before the changes to Capital Gains Tax (CGT) in April. While a large proportion of owners will benefit from the changes, there are some that will actually be worse off, and end up paying more tax if they sell their properties after the tax changes are implemented.
Mark Hildred explains: “The previous CGT rates were based on a tiered system. Higher rate tax payers who sold their buy-to-let properties after only three years would face the heftiest tax bills, at 40% being levied on the profits made, after the annual allowance of £9,200 is deducted. This tax bill would reduce to 24% after the property had been in possession for more than 10 years. From April 2008, this will change to a flat rate of 18%.
“While this change is welcomed by the higher rate taxpayers, basic rate taxpayers who have owned a property for more than 10 years currently pay just 12% tax on their capital gains. This is a significant increase in the amount of tax they have to pay.”
For more information contact Moore Thompson on 01775 711333.
