Budget: Higher rate of capital gains tax on residential property cut to 24% from April

Christopher Springett, Tax Partner at professional services and wealth management firm Evelyn Partners, comments:

“In an announcement that came as something of a surprise, the Chancellor made a reduction in the rate of capital gains tax applying to residential property.

"Currently, CGT is applied at 28% on residential property at the higher rate, but for disposals from 6 April 2024, that rate of tax will fall to 24%.

"The basic rate for CGT on residential properties remains unaffected at 18%.

“In terms of the direction of travel with property taxation over recent Budgets, we are more familiar with increases than reductions.  The cut also goes against talk over the past few years that has centred around aligning CGT with income tax rates.

“The Treasury says that, ‘This will encourage landlords and second home-owners to sell their properties, making more available for a variety of buyers including those looking to get on the housing ladder for the first time’ – but it remains to be seen whether a 4 per cent change will achieve this desired effect.

“For those who are looking at property as an investment beyond their main residence, the CGT rate on residential property remains 4 per cent higher than the rate applied to most other asset classes, meaning that property investments do need to return more in terms of capital growth to ensure post-tax returns are competitive with, say, a portfolio of equities.”