Don't sell buy to let property just for tax reasons, expert says

05 July 2010

Written by David Whittaker

An expert has told readers of the Scotsman not to give up their buy to let property simply to avoid tax hikes.

Glen Gilson, partner and head of financial services firm HBJ Gateley Wareing, responded to a letter sent to the newspaper from an investor who had purchased a second home instead of a pension and was worried how rises in capital gains tax and VAT could affect their assets.

The expert warned that any decision made by portfolio owners on what direction they will take after the Emergency Budget should not be solely informed by the increase in duties.

Although CGT is to rise from 18 to 28 per cent, he noted that this tax is applicable after the deduction of expenses and exemptions and basic rate taxpayers - those who earn under £37,400 - will not be subject to the increase at all.

Even for those that are eligible for the ten per cent increase, the duty is still lower than income tax - which stands at 50 per cent, Mr Gilson argued, while VAT can be claimed back by registered companies.

His recommendations follow the comments of Ian Potter, operations manager of the Association of Residential Lettings Agents, who recently said that he did not believe the rise in CGT would be as damaging to the private rented sector as some had anticipated.

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