Landlords to shell out £500m in another raid on taxes

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The British government is launching another £500 million tax raid on property investors with a major reform of capital gains tax rules.

The tax – CGT for short – is paid by owners on the increase in value of a property when they sell or gift a home.

Currently, the tax is reduced by two main reliefs – Principle residence Relief and Lettings Relief, but both face changes.

Principle Residence Relief cancels any gain in value while an owner lives in a property as their main home. The relief is calculated for time in residence plus an 18-month tax-free period.

From April 2020, the Treasury wants the tax-free period cut to nine months.

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Lettings Relief restricts CGT for owners who have lived in a property as their main home but moved out to let the home to tenants.

The relief is claimed as the lower of Principle Residence Relief, the gain during the time the property was rented out or £40,000.

From April 2020, Lettings Relief will only apply to the time an owner has shared their main home with a tenant.

Landlords pay an extra £3,000 tax on rental profits

Landlord income tax on rental profits is also rising as more than half of landlords (58%) paid more as cuts to mortgage interest relief started to bite.

The third phase of dropping the relief to 20% from 40% for landlords paying tax at a higher rate takes effect from April 6, 2019.

Buy to let mortgage lender Paragon says the average landlord with three or more letting properties handed an extra £3,039 to HM Revenue & Customs in 2017-18, when mortgage interest relief cuts started.

As a result, the survey says one in four landlords wants to sell up.

Letting agent fee ban on the way for Wales

Welsh Assembly members have voted to ban letting agent and landlord fees, with a new law expected to start in the autumn.

The ban follows a similar law starting in England from June 1.

TheRenting Homes (Fees etc.) (Wales) Bill, allows letting agents and landlords to charge tenants for rent, security deposits, holding deposits, utilities, communication services, council tax, green deal charges and default fees.

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