Article

The upcoming July General Election is stirring up significant discussions, especially with the latest announcement from the Tory party. The Tories have revealed a bold new plan that, if they win, could bring substantial relief to landlords across the UK. The proposal is a two-year scheme allowing landlords to sell their properties to tenants without incurring capital gains tax (CGT). This initiative aims to address the hardships landlords face while providing an avenue for tenants to become homeowners. Let’s dive into the current legislature, the challenges landlords face, and the full scope of this proposed scheme.

Understanding the Current Legislature and Landlord Pain Points

Current Capital Gains Tax Legislature

Currently, landlords in the UK are subject to CGT when they sell a property that is not their primary residence. The CGT rates for property are 18% for basic-rate taxpayers and 28% for higher or additional-rate taxpayers. This tax liability often discourages landlords from selling their rental properties, as the CGT can significantly reduce their profits.

Issues faced by Landlords

1. Tax Burden: The high CGT rates can be a considerable financial burden, making it less appealing for landlords to liquidate their assets.

2. Regulatory Challenges: Landlords must navigate an increasingly complex regulatory environment with stringent rules and regulations governing rental properties.

3. Market Volatility: Fluctuations in the property market can impact the value of rental properties, adding another layer of financial risk for landlords.

4. Maintenance Costs: Ongoing maintenance and repair costs can erode the profitability of rental properties over time.

The Tories’ Two-Year Scheme: A Closer Look

Scheme Outline

The Tories’ proposed scheme is designed to provide landlords a temporary but impactful relief. Here are the key features:

• CGT Exemption: For two years, landlords who sell their rental properties to tenants will be exempt from paying CGT.

• Eligibility: The scheme applies to all landlords who own residential rental properties, regardless of the number of properties they own. The tenant must also have been in situ before July 10th, 2024, which stops landlords from replacing sitting tenants.

• Tenant Incentives: Tenants purchasing the properties will receive support in the form of government-backed mortgages or subsidies to facilitate their transition to homeownership.

Benefits for Landlords

• Financial Relief: The CGT exemption can lead to substantial savings, making it more financially viable for landlords to sell properties.

• Simplified Exit: Landlords looking to exit the rental market can do so more easily without the financial penalties typically associated with CGT.

• Market Stability: By encouraging property sales to tenants, the scheme could contribute to a more stable housing market.

Benefits for Tenants

• Homeownership: Tenants will have a unique opportunity to purchase their rented homes, moving from renters to homeowners.

• Financial Support: With potential government-backed mortgages or subsidies, tenants will have better financial support to make the transition.

Exploring Tax-Efficient Investment Alternatives: UK Gold Currency

While the proposed scheme offers significant relief for landlords, it also opens the door to explore other tax-efficient investment options. One such option is investing in UK gold currency, which is currently exempt from both CGT and VAT.

Why Consider Gold?

• Tax Efficiency: Investments in UK gold coins, such as Britannias and Sovereigns, are free from CGT and VAT, making them a highly tax-efficient investment.

• Stability: Gold is often seen as a safe-haven asset, providing stability and security in times of economic uncertainty.

• Diversification: Adding Gold to an investment portfolio can provide diversification and reduce overall risk.

Making a move to Gold

Gold presents an attractive alternative for landlords and investors seeking gold-efficient and stable investment. The combination of tax exemptions and the inherent value of Gold makes it a compelling choice, especially in the current economic climate.

The Tories’ proposed two-year CGT exemption scheme for landlords is a significant development that could reshape the property market and provide much-needed relief to landlords. By alleviating the tax burden and facilitating tenant homeownership, this scheme offers a win-win solution. Additionally, for those looking to diversify their investments and maximise tax efficiency, UK Gold currency remains an excellent option. As the election approaches, landlords and investors alike should stay informed about these potential changes and consider how best to navigate the evolving landscape.

To get the chance to incorporate Gold into your investment portfolio, request further information from our Gold Partners in the form below.