Reports show that the amount of capital gains tax people in the UK paid last year was around £6.9 billion, which is up a whopping 24.6% from the previous year. This jump is believed to be down to increasing asset values and buy-to-let investors. The basic capital gains tax rate was 18% until 2010 when George Osborne increased the rate of the tax to 28% and this has also led to increasing the amount of tax collected. The £6.9 billion amounts to approximately 1.4% of all taxes collected last year.
Lucy Brennan, who is a partner at Saffery Champness, commented regarding the rise:
“The reported rise in capital gains tax liabilities was likely to be driven, by rising house prices and larger volumes of sales. With the Autumn Statement on the horizon, the chancellor is likely to mitigate against any potential shortfall in the public coffers and capital gains tax reliefs, along with pensions relief.”
And Mark Giddens, who is a partner at UHY Hacker Young, said that:
“As house prices rise, more and more buy-to-let investors are finding that their property sales are leaving them exposed to significant Capital Gains Tax bills. In recent years, it hasn’t been uncommon for buy-to-let investors to see their properties appreciate by £50,000 or £100,000 in a relatively short period in London and the South East. Those gains would have been taxed at 18% a few years ago, but the 2010 changes mean that more of them are now taxed at 28%.”
Buy to let landlords have certainly been hit by the higher rate of capital gains tax with an average bill for this tax around £28,500. Interestingly, and perhaps not surprisingly, it is London and the South East who pay 52% of all the capital gains tax paid in the UK, whilst Scotland, Wales and Northern Ireland pay just 8% of the total combined.
To read more on this story you can go to the Accountancy Age website which you will find at the following link: Large Increase In Capital Gains Tax Payments
If you require any advice on capital gains tax or any other taxes please contact WHR Accountants by giving us a call on 028 3752 2909.