Press Release Summary: Chancellor of the exchequer Alistair Darling is not a popular man in some parts. His pre-budget statement drew accusations from political opponents that he was a \"magpie\", stealing the tax plans of others.
Press Release Body: Chancellor of the exchequer Alistair Darling is not a popular man in some parts. His pre-budget statement drew accusations from political opponents that he was a \"magpie\", stealing the tax plans of others, while he, like his boss and former incumbent of number 11 Downing Street, faced Conservative jibes over Labour\'s apparent u-turn on plans to call an early general election.
Mr Darling has also faced fire over changes to capital gains tax as he scrapped taper relief and introduced a new flat rate band of 18 per cent to replace the ten, 20 and 40 per cent bands which exist at present.
Criticism of this change has come from the small business sector, with the chief executive of the Quoted Companies Alliance, John Pierce, telling the BBC: \"This is further evidence that rather than supporting smaller growing companies, the government are hemming them in.\"
While Mr Pierce argued that the tax would hit small businesses which would otherwise pay ten per cent tax on new assets, one sector of the economy will have good reason to smile as a result of this change.
The implications of this tax alteration were explained by the BBC, which pointed out that those owning more than one residential property (which could be a second home, or else a buy-to-let investment) currently have to pay between 24 per cent and 40 per cent if they sell it on. Clearly the 18 per cent rate is good news for them.
Industry analysts have predicted that this will have a major effect on the market. Lucien Cook, director of research at Savills Estate Agents, told the Times: \"The removal of the tax advantage achieved from long-term ownership could mean that there will be more trading of property and more liquidity.\"
A similar view is expressed by Knight Frank\'s head of research, Liam Bailey, who told the same paper: \"This is a big change and could have the effect of raising investment volumes and underpin prices.\"
According to the Times report, this effect will only be apparent by its absence in the next few months, as higher rate payers will hold off selling properties until the new rate takes effect in April. Thus, paradoxically, the immediate effect may be a short-term quietening of the market, with the boom to follow once the next financial year begins.
The buy-to-let market in the UK, as survey after survey has shown, consists in the main of property investors looking to make home purchases for the long term. But with the change announced this week, buyers who currently pay taxes at the higher rate can look forward to a future where, whenever they need or wish to dispose of a property, the tax rake-off will be that much less.
2022
