Investors are panicking ahead of the Government’s proposed Capital Gains Tax rise by selling off their second homes and property investments.
The new coalition announced that they intend to increase the CGT level to around 40 per cent in their Budget on June 22, from the current rate of 18 per cent. It was an integral part of the Conservative’s deal with the Liberal Democrats and it looks unlikely that any amendments will be made to the proposal.
This means that anyone with investments in property or other non-business assets will be liable to pay a substantial tax increase.
But in order to avoid getting stung for extra payments many investors have been scrambling to sell off their property investments.
Those expected to be hardest hit are people reaching retirement who are selling off assets that they have saved years for.
According to estate agents Savills there has been a 40 per cent increase in valuation inquiries over the past ten days.
And speaking to the Telegraph Stephen Herring, senior tax partner at BDO, the accountants, said: “We are being inundated, and I wouldn’t say that lightly.”
Senior Conservative backbencher David Davis has criticised the CGT rise in today’s Daily Mail, saying it will not work.
“The aim of this is to enable the coalition government to fund a reduction of taxes for the least well-off by raising the threshold for income tax to £10,000,” he says.
“Yet there are legitimate questions that should be asked before we rush ahead with the planned increase in Capital Gains Tax.”
He argues that instead of taxing the rich it will penalise middle-earners who invested in property because their pensions and savings were doing so poorly in deposit due to poor interest rates.
“What they did — save to provide for their old age, unexpected adversity and their children — was laudable. It is explicitly what Conservatives approve of.
“And it is these people, not the rich, who will pay the lion’s share of the increased Capital Gains Tax.
“It will penalise hard work and saving. Far from taxing the rich, it will simply tax the elderly at their point of maximum vulnerability — when they enter retirement.”
© Fair Investment Company Ltd