The property industry has accused the Government of making snap changes to the way non-UK residents are taxed when they sell commercial property without having thought about the effect the new rules will have on the London investment market.
Leaked advice shows how private equity firm was able to buy and sell without paying stamp duty or capital gains tax
Major amendments to the Finance Bill have been “slipped in” at committee stage.
According to the Law Society, they set a disturbing and undemocratic precedent of avoiding proper consultation and scrutiny.
The changes could result in property investors paying income tax rather than Capital Gains Tax on profits when they sell.
A campaign to reduce Capital Gains Tax paid by landlords when selling their rented home to sitting tenants has won the backing of Conservative MP Kevin Hollinrake, the founder of the franchise agency giant Hunters.
A surprise reduction in capital gains tax has been welcomed by investors but is expected to prompt outrage from buy-to-let landlords after residential property was exempted from the changes.
The headline rates of CGT – which is paid on profits from asset sales – will be cut on 6 April from 18% to 10% for basic rate taxpayers and from 28% to 20% for higher rate taxpayers.
“We want people to invest in our businesses and help them create jobs. The best way to encourage that is to let them keep more of the rewards when that investment is successful,” said George Osborne.
Britain’s housing crisis can only be solved if the government switches to a capital gains tax on homes, according to a report. The National Institute of Economic and Social Research (Niesr) warned that prices would continue to rocket, pricing first-time buyers out of the market, while property was lightly taxed compared with other assets that investors can buy.
Buyers need to find a deposit of £80,000 to afford an average home, after a 50% rise in prices over the past decade.
The thinktank also urged ministers to end their reliance on private sector housebuilders, which it said could never meet the demands for affordable homes to rent or buy.
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