If as many expect Capital Gains Tax (CGT) rates are aligned to people’s personal income tax then landlords selling properties would be on average £11,00 worse off, it has been claimed.

Wealth management platform Quilter reckons Chancellor Rachel Reeves is likely to make such an announcement in her budget this Autumn as Labour casts around for new sources of tax revenue to fill what it claims is a fiscal ‘black hole’ left by the outgoing Tory government.

The firm has based its calculation on the premise that landlords making a gain after selling a rental property currently pay 18% CGT as a basic-rate taxpayer, or 24% if you pay a higher rate of tax. But aligning CGT to personal income tax levels would raise this to 20% and 40% respectively.

This is based on an average gain by landlords when selling a property of £74,000 although in some areas this is much higher – for example in London the average gain is £137,000.

Tight lipped

“During Labour’s election campaign the party was tight lipped on its plans surrounding CGT,” says Shaun Moore, a tax and financial planning expert at Quilter.

“While senior Labour figures were forthright in their conviction that the party would not raise national insurance or income tax, no one was willing to get drawn on what it might do to other taxes such as CGT.

“If plans such as aligning CGT with income tax rates do become a reality, then we could see some significant repercussions in the short and long term.

“Unless anti-forestalling measures are announced with any plans then we could see a surge in property sales as homeowners rush to sell their second properties before new legislation comes into place.

"This could temporarily boost housing market activity, and many people will reconsider their property portfolios, potentially shifting their investments to other assets with more favourable tax treatments.”