Insurance News Archive
Buy to let insurance policyholders face double tax bill
Posted by Judith Stevenson
Experts have warned that buy to let policyholders could face a doubling of tax bills if the new government raises capital gains tax (CGT).
It is expected that the new Conservative-Liberal Democrat coalition will raise CGT to 40 per cent for non-business assets, and with most buy to lets in this category, they would therefore would not be exempt from the rise.
"Our analysis shows that if CGT were raised in line with the marginal income tax rate without introducing an inflation-based indexation allowance, it would more than double the tax bill for thousands of investors," said a report from Fidelity.
It added that failing to take into account inflation during the period the investor has owned the property will mean that a large proportion of the tax bill will be based on a "misleading nominal gain".
Earlier this week, Ian Potter, operations manager for the Association of Residential Lettings, said that there could be a "fire-sale" from buy to let insurance policyholders due to the rise in CGT.
14 May 2010
