Property investors face renewed uncertainty over capital gains tax as speculation grows over possible changes in next month’s Budget.
The government is reportedly considering changes to CGT as it looks for additional revenue.
Reports suggest ministers could consider aligning CGT more closely with income tax. However, the government has not announced any changes.
The speculation comes amid pressure on the public finances.
Public sector borrowing reached £18.3bn in August, £3.5bn above official forecasts.
Reports that the government could raise the £12,570 personal income tax allowance have also fuelled speculation over how it might fund the change.
For landlords and other property investors, any increase in CGT could influence decisions over when to sell assets.
Investors could delay sales
Susannah Streeter, chief investment strategist at Wealth Club, said: “Tax speculation is ramping up ahead of the Budget.”
She said a potential increase in the personal allowance could increase pressure on the government to raise revenue elsewhere.
Streeter added: “If the government is looking to put more money into people’s pockets by reducing their income-tax bill, it would need to find the money elsewhere.
“CGT is increasingly being talked up as a potential source.”
Higher CGT rates could also change investor behaviour.
Streeter said: “For investors, the prospect of a higher CGT bill could mean some simply decide not to sell assets and hang onto them instead.”
For the property market, that could mean some landlords and investors delay disposals while they assess the tax implications.
However, Streeter cautioned against making investment decisions based solely on speculation.
She said: “The old adage – don’t let the tax tail wag the investment dog – should still be adhered to when it comes to a broad investment strategy.”
The government has yet to confirm any increase in CGT.
