Newspaper article The Evening Standard (London, England)

Huge Tax Bonanza for Second Home Owners

Newspaper article The Evening Standard (London, England)

Huge Tax Bonanza for Second Home Owners

Article excerpt

Byline: JONATHAN PRYNN

THE Chancellor has handed a massive tax break to more than a millionsecond home owners, the Evening Standard reveals today.

The tax rate on profits from sales of holiday homes or buy-to-let investmentshas been slashed from as much as 40 per cent to 18 per cent from next April.

The move fuelled speculation at Westminster that Labour rushed out a "botched"pre-Budget report in response to Conservative tax proposals added to whichthere were further signs of disarray when Gordon Brown was humiliated by DavidCameron in a Commons clash today.

The cut in capital gains tax announced by Alistair Darling yesterday was mainlyaimed at increasing the tax paid by wealthy private equity bosses who currentlyenjoy a 10 per cent rate.

But tax experts said it had inadvertently handed a major tax break to secondhome owners and will save them thousands of pounds when they sell. AndrewGoldstone, head of personal tax and estate planning law at Mishcon de Reya,said: "It's a massive tax cut for property owners. Hardly what you'd expectfrom a Labour government, traditionally against fat-cat property investors." "Ican't see there are many votes in saying, 'We're cutting tax for propertyinvestors'. Surely it's a gift for the Tories." Owners pay CGT - a tax on thedifference between the price they paid for an asset and the price they sell itfor - on all homes except the one they live in. The rate is currently 40 percent for the first three years that the property is owned, falling by two percent a year to a minimum rate of 24 per cent after 10 years of ownership.

The move by Mister Darling was aimed at making wealthy private equity bosseswho enjoy a 10 per cent tax rate after two years under "taper relief " rules,pay more.

As well as hitting private equity bosses, Mr Darling's new flat rate of 18 percent is designed to simplify the system by bringing the rate for business andnon-business assets such as holiday homes in line with each other. …

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