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The prospect of a hike in capital gains tax (CGT) for property investors appears to be off the table, according to the government鈥檚 response to a review of the tax system.

It followed the UK鈥檚 second so-called 鈥淭ax Day鈥� on 30 November, when the government published papers on a wide range of topics that also included a consultation on stamp duty relief changes.

Last November, the Office of Tax Simplification (OTS) proposed aligning rates of capital gains tax with income tax, which would have seen the top rate of CGT rise to 45% from 28%.

For investors selling at a gain of £500,000, the move could have added more than £75,000 to their tax bill, depending on their circumstances and income tax band.

鈥淭he short of it is that government has given short shrift to some of the more dramatic proposals from the OTS,鈥� said Nimesh Shah, chief executive of tax advisory specialist Blick Rothenberg. 鈥淭his should give property investors confidence that CGT won鈥檛 rise for at least the lifetime of this parliament.鈥�

Shah believes the government is moving into election mode and increasing the tax burden further risks alienating some voters. 鈥淭he CGT changes were put forward as the solution for paying for the pandemic but it feels like there has been some push back from Number 10.鈥�

Meanwhile, the government is looking to close loopholes in the stamp duty system that relate to reliefs on mixed-use schemes and multiple dwellings.

It is an attempt by the government to shut down the fast-expanding reclaims industry, where companies use the loopholes to claim refunds from HMRC.

Under the current system, stamp duty rates are lower for mixed-use transactions but the government is proposing that the tax should be paid on the residential portion of the sale. It is also consulting on changes to prevent multiple dwellings relief from being used on annexes.

鈥淚 would expect the changes to be introduced in autumn next year,鈥� said Sean Randall, stamp duty partner at Blick Rothenberg. 鈥淓veryone involved in the buying process will need to be aware of the timeline as stamp duty bills could be significantly affected.鈥�

For more details, read Sean Randall鈥檚 column in Property Week .

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