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The Conservatives would abolish capital gains tax when a landlord sells a property to a tenant.
The tax break will last for two years and is designed to free up housing stock and make it easier for people to buy a home.
The Conservative manifesto estimated the pledge would cost just £20 million a year, suggesting the party is not expecting to attract large amounts of money.
But Graham Boa, a partner at accountancy group UHY Hacker Young, believed the manifesto’s promises risked creating major tax loopholes.
He said: “The proposed reduction in capital gains tax when landlords sell property to tenants will be open to misuse unless the legislation is carefully drafted.”
“There is a risk that landlords selling properties will enter into lease agreements that result in a sale and avoid significant capital gains tax.”
“The landlord can also sell the property to the tenant on ‘credit’ – the tenant can sell it at no profit and repay the debt to the landlord. Either way, HMRC stands to miss out on a huge amount of tax.”
“If the law is drafted in a way that avoids the risks of tax evasion, it is likely to become very complicated and difficult for taxpayers to understand. Nobody wants to see a more complicated tax system in the UK.”
According to HMRC data, around £1.7bn of capital gains tax was collected on sales of second or subsequent homes in the 2022/23 financial year (ending 5 April), the majority of which were sales of investment properties by landlords with the intention of renting out.