#31 Reports indicate property capital gains (CGT) will remain unchanged

In the lead-up to the new Labour government’s first Budget, capital gains tax (CGT) has been a subject of significant discussion. Speculation has grown about how the government will address the economic challenges ahead, and property-related taxes, including CGT, stamp duty, and inheritance tax, have all been rumoured to be under scrutiny.

Prime Minister Keir Starmer has warned that the Autumn Budget, scheduled for October 30th, will be “painful.” Chancellor Rachel Reeves has been instructed by the Treasury to close a ￡40 billion funding gap, leading to much anticipation around which areas of spending or taxation may see changes.

However, new reports suggest that CGT on the sale of second homes and buy-to-let properties will not be increased in the upcoming Budget — welcome news for property investors.

Why is the Government Likely to Leave Property CGT Untouched?

In the final Budget of the previous Conservative government, the top rate of CGT was cut from 28% to 24%. The Office for Budget Responsibility (OBR) had estimated that the reduction would increase property transactions, which in turn would generate higher stamp duty revenues, adding nearly ￡700 million to the Treasury's coffers.

Looking towards the Autumn Budget, ministers are reportedly concerned that raising CGT on property could discourage sales, reducing overall tax revenue. A slowdown in property transactions would likely lead to lower stamp duty collection, directly impacting government income at a time when the Treasury is desperate to plug the fiscal gap.

Targeting Other Asset Classes Instead of Property

Although property CGT seems to be off the table, reports suggest that other forms of capital gains — such as those on shares and financial assets — may face increases. These changes could be part of the government’s strategy to focus taxation efforts on sectors that are less likely to disrupt economic activity.

Impact on Landlords and Property Investors

Rightmove’s latest Rental Trends Tracker highlighted that some landlords were bracing for a potential CGT hike, which would have made selling properties less attractive. The news that CGT on second homes and rental properties will remain unchanged will likely ease concerns among many investors.

In the face of increasing operating costs, regulatory changes, and rising mortgage rates, this development is expected to provide much-needed relief for buy-to-let landlords. It may also encourage continued activity in the rental market, supporting overall market stability.

The final details will be confirmed when the Autumn Budget is announced on October 30th, but for now, property investors can breathe a sigh of relief, knowing that CGT on property appears safe — at least for the time being.

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