There has been a discussion among property tax industry experts that the government can potentially align the Capital Gains Tax (CGT) rates with Income Tax rates. If the speculation comes true, property landlords might face a £11,000 bill. The data comes from research done by Quilter, a wealth management and financial advisory firm.
Is the CGT Rate Increase a Possibility?
The information about potential Capital Gains Tax (CGT) rates comes after Chancellor Rachel Reeves said in her speech about a £22 billion funding gap in government finances. The Labour government pledged in their election manifesto to not increase the National Insurance, VAT, and Income tax rates. So, a potential CGT rate increase might be a good option for the government to fill the funding gap.
Capital Gains Tax (CGT) is paid on the profit made when you sell your property. Currently, the basic rate taxpayers pay an 18% CGT, and the higher rate taxpayers pay a 24% CGT. Also, property owners who sell their primary residence get a Private Residence Relief (PRR) which makes them exempt from paying CGT. However, property owners and landlords with second homes are subject to CGT on the profits they make from selling their properties.
The Chancellor, in her speech, explained about the £22 billion funding gap and her plans to fill the gap. However, she did not specify any plans to align the CGT rates with Income Tax rates. If the government plans to align CGT rates, the new rate will be 20% for basic-rate taxpayers and 40% for higher-rate taxpayers.
What Could Be the Potential Consequences of CGT Increment?
According to property experts, if the CGT rates increase, the property market could boost temporarily as many people will reconsider their property investment and may shift their investments to other assets with more favourable tax treatments. Many homeowners will rush to sell their properties before the new CGT rate legislation comes into effect. To avoid this sudden surge, the government may announce some anti-forestalling measures.
Here is the data on the potential rates of CGT based on property values of different areas in the UK.
Regions | Average Gains at Sale | CGT at 18% | CGT at 20% | CGT at 24% | CGT at 40% |
|---|---|---|---|---|---|
London | £137,000 | £24,120 | £26,800 | £32,160 | £53,600 |
South East | £103,000 | £18,000 | £20,000 | £24,000 | £40,000 |
East of England | £92,500 | £16,110 | £17,900 | £21,480 | £35,800 |
South West | £90,000 | £15,660 | £17,400 | £20,880 | £34,800 |
East Midlands | £70,000 | £12,060 | £13,400 | £16,080 | £26,800 |
West Midlands | £69,000 | £11,880 | £13,200 | £15,840 | £26,400 |
Wales | £61,000 | £10,440 | £11,600 | £13,920 | £23,200 |
North Wales | £56,500 | £9,630 | £10,700 | £12,840 | £21,400 |
Yorkshire & The Humber | £52,000 | £8,820 | £9,800 | £11,760 | £19,600 |
North East | £30,000 | £4,860 | £5,400 | £10,800 | £4,320 |
UK | £74,000 | £12,780 | £14,200 | £28,400 | £11,360 |
Source : Zoopla
Property experts advise that rushing to sell a second home or buy-to-let based on what might happen is not sensible. You should do so if this is already in your plan.
Conclusion
After the Chancellor’s speech about the funding gap in public finances, property industry experts are expecting a Capital Gains Tax (CGT) rate increase to align with the Income Tax rates. If CGT rates rise, the property market may see a sudden surge as people rush to sell their properties before the new legislation comes into effect. So, the government should impose some anti-forestalling measures if the CGT rates increase.
- Will the Autumn Budget 2026 Raise Your Tax Bill? What’s Confirmed & What’s Not - 8 September 2026
- The Third-Party Data Behind HMRC’s Nudge Letters to Landlords - 25 August 2026
- Autumn Budget 2026 Timeline: The Key Dates to Watch - 21 August 2026
