Landlords have been spared a potential 87.5% increase in capital gains tax (CGT) liabilities after Chancellor John Healey reportedly ruled out raising rates in the 28 October Budget, according to analysis by The Letting Partnership.

The research found that the average UK property increased in value by £74,442 over the decade to July, rising from £198,169 to £272,611. Under the current 24% higher-rate CGT rate, a landlord selling at that value would face an illustrative tax bill of £17,866, excluding allowances.

Aligning CGT with income tax rates could have increased the liability to £29,777 for higher-rate taxpayers paying 40%, an additional £11,911. For additional-rate taxpayers paying 45%, the bill could have risen to £33,499, an increase of £15,633. Basic-rate taxpayers could also have faced higher bills, with the illustrative liability rising by £1,488.

Chris Mason, chief operating officer at The Letting Partnership, said: "The Chancellor's decision not to pursue an increase in Capital Gains Tax will come as a welcome relief to landlords, particularly those who have seen the value of their investment properties increase substantially over the last decade.

“Aligning CGT with income tax rates could have added more than £15,600 to the tax bill of an additional-rate taxpayer selling an average property. At a time when landlords are already facing considerable financial and regulatory pressures, avoiding such a significant increase is undoubtedly a positive outcome."

However, landlords continue to face changes to rental income taxation scheduled for April 2027, when separate tax rates on property income are due to increase by two percentage points, alongside the expansion of Making Tax Digital requirements.

The Renters’ Rights Act has also introduced major changes to the private rented sector, including the abolition of Section 21 no-fault evictions and the move to periodic tenancies. A national landlord registration system is due to begin rolling out in December.

Mason added: "The Government must recognise that it is the cumulative impact of these changes that risks undermining landlord confidence. While improving standards across the rental sector is important, so too is ensuring that property investment remains financially viable.

"The decision to reject calls to raise CGT is a welcome step in the right direction, but landlords need more than the avoidance of further tax increases. They need a stable and supportive environment that gives them the confidence to remain in the sector and continue providing much-needed rental homes."

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