Does our tenant have to pay CGT after 10 years?

Does our tenant have to pay CGT after 10 years?

by Readers Question

Guest Author

11:12 AM, 7th April 2022, About 2 years ago 18

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A few months ago an email was sent to our PDPLA (Portsmouth and District Private Landlord Association) mentioning that tenants must start paying CGT (Capital Gains Tax) after 10 years in the same home!

It vaguely rang a bell, so I had a look at our tenancy records… O dear two tenants are in the frame!

I feel sure this must be wrong, after all, why would a tenant be liable for our capital gains? If it is true, then could they be “excused” as they have had new AST’s every 3 years?

Does anyone know if tenants do have to start paying CGT after 10 years?

Regards
Allan


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Comments

Neil Patterson

11:36 AM, 7th April 2022, About 2 years ago

Hi Allan,

I have had a good Google and I can't see anything that this could have got confused with?

James M

12:15 PM, 7th April 2022, About 2 years ago

Not sure about CGT - but after £125k in rent from the same tenant, they 'might' have to start paying SDLT at 1% of rentable value per year.. I'm sure the data miners are starting to look at every opportunity to increase tax revenues.

TheBiggerPicture

12:25 PM, 7th April 2022, About 2 years ago

Tennant's assets at beginning 0.
Tennant's assets at end 0.
Where is the gain to tax?

Also capital gains tends to be on realised gains in the u.k.

Jo Westlake

12:56 PM, 7th April 2022, About 2 years ago

This is something Shelter and the other activist groups could usefully campaign to have abolished or the threshold raised significantly.
One of my long term tenants on UC is rapidly approaching the current threshold even though the rent is slightly below LHA level.

Graham Turrell, Landlord & Entrepreneur

13:35 PM, 7th April 2022, About 2 years ago

It's about as wrong as it's possible to be wrong.

Judith Wordsworth

13:37 PM, 7th April 2022, About 2 years ago

Reply to the comment left by Jo Westlake at 07/04/2022 - 12:56
Hate to involve Landlord bashing Shelter in anything but would be beneficial for long term tenants.
Also Labour need as they want to introduce lifetime tenancies.

Rob Crawford

14:07 PM, 7th April 2022, About 2 years ago

How would HMRC know the term a specific tenant has been in a rental residence? How would they know whether or not an AST has been renewed or not? Doesn't seem to be enforceable to me! Assuming it's the same AST (if the AST has rolled over as a a non contractual periodic or the AST is renewed with a new fixed term is this not a break in the current contract?) Most tenancies outside of London would take over 10 years to achieve the £125k threshold and as mentioned previously, easy to avoid!

Smithy

15:11 PM, 7th April 2022, About 2 years ago

Would this also apply to Social Tenants? There must be many who meet this threshold.
I have never heard of any being charged a tax.

I have one long-term tenant - lady in her 80's - she struggles on benefits - so asking her to pay any extra would surely be counter intuitive

Yvonne Francis

15:46 PM, 7th April 2022, About 2 years ago

I'm absolutely flabbergasted by this SDLT tax. So much for long term tenancies and making rented properties their own home. Rob, read my link, and re-consider how enforceable this tax could be and how well one would sleep at night if you evaded it. If anyone could tell me the logic of this tax I would be very grateful. Are HMRC thinking, if properties are bought and sold
they would get a share, so they want their share on leases too.
https://www.chancellors.co.uk/resource-centre/useful-information-for-tenants/stamp-duty-land-tax-for-tenants

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