Budget Changes to Capital Gains Tax for Property Investors

Budget Changes to Capital Gains affecting Landlords

Gains on disposals of residential property made on or after 6 April 2024 will be subject to a main capital gains tax (CGT) rate of 24%. Prior to this date, such gains were subject to CGT at 28%.

The main rate applies to gains on disposals of residential property that fall above a taxpayer’s basic rate band. If, after all of the taxpayer’s other income has been taxed, there is basic rate band remaining, any portion of residential property gains falling within the band will be taxed at the lower residential property CGT rate, which is not being changed and remains at 18%.

It should also be remembered that the CGT annual exempt amount will drop from £6,000 to £3,000 from 6 April 2024.

Despite the reduction of the main Capital Gains Tax rate, the reduction of the annual exemption from £12,500 to £6,000 last year, and down to £3,000 this year, is likely to result in higher amount of tax being payable on the disposals of property.  This will make it more expensive to exit the property investment market, as well as trying to sell and upgrade your portfolios.