Buy to Let investors to pay income tax rather than CGT

Ministers’ ‘back door’ amendments penalise buy-to-let investors 

Ministers have sneaked amendments to proposed legislation on buy-to-let properties through the back door, lawyers’ leaders complained yesterday.

They claim that the move will create uncertainty as investors will be forced to pay income tax rather than a capital gains tax on investment properties.

Law Society chiefs said that significant amendments to the Finance Bill were “slipped in at committee stage” and that doing so “set a disturbing precedent of avoiding proper consultation and scrutiny”. Catherine Dixon, the society’s chief executive, complained: “By introducing a significant change in this way, the government is denying the public the chance to consider and comment on these proposals.

“The way these changes were introduced, in particular without consultation on the draft legislation before it was added to the bill at such a late stage, starts to feel like legislation by stealth.”

In comments to the government on the Finance Bill’s land transactions clauses the society said: “The average buy-to-let investor will have assumed that it will be taxed at capital gains tax rates on ultimate disposal of the property.

“If the government’s intention were to change this, then the society’s view is that this should have been subject to proper consultation on the principle, policy and the draft legislation. If the government’s intention is not to change this, then the society considers that the terms of the legislation should be amended to reflect that.”

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