Buy to let landlords who have rented out a home where they once lived are urged to sell up quickly to avoid higher tax bills.

Capital gains tax rules are due to change from April 6, 2020 that will take a larger bite from their sell-on profits.

CGT will impact landlords selling homes by –

  • Scrapping lettings relief that allows each owner to ringfence £40,000 of gains in property values
  • Slashing the 18-month CGT-free period of grace in half to nine months
  • Making CGT bills payable in full within 30 days rather than the current up to 22 months ahead

CGT is paid at a rate of 18% for basic tax payers or 28% for higher rate tax payers.

From April 6 next year, only landlords who share their main home with tenants can claim lettings relief.

One tax adviser warns landlords unaware of the tax changes face a massive financial shock next year.

Bridget Culverwell of accountancy firm Moore reckons some of her clients will pay extra CGT adding up to more than £20,000 if they delay property sales until next year.

“For many landlords, the scale of the tax increase is so substantial that it is making them question whether they want to hold on or sell out now,” she said.

“Considering the amount of time it takes to sell a property, landlords don’t have long to make that decision.

“This is another disincentive for new buy-to-let owners who are being increasingly squeezed by the taxman.”

The Treasury expects to raise around £500 billion from the new rules by 2024.

All landlords pay CGT if they sell a property that has increased in value by more than the annual exempt amount of £12,000, but only landlords who have lived in a buy to let as their main home at some time during their ownership can claim letting relief.