Investors brace for an increase in tax rate

Property buyers are among those who could be hit by the most anticipated UK budget since the 1980s.

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Property investors are among those who could be hit by the most anticipated UK budget since the 1980s. The new Conservative-Liberal Democrat coalition government will deliver an emergency budget on June 22 that is widely expected to contain some of the most severe public spending cuts in recent years. Property analysts expect that the cuts could damage market sentiment and curtail price growth in the short term.

David Cameron, the prime minister, last week warned that "Britain's whole way of life" could be changed by the coming cuts aimed at slashing the country's £156 billion (Dh836.26bn) fiscal deficit. The budget is also expected to contain increases to the capital gains tax which is applied to gains on investments in property and other assets. "Indications are that the existing rate of 18 per cent is to be replaced by a tax rate of at least 40 per cent on non-business assets such as second homes and buy-to-let properties," said Rob Bruce, the residential research analyst at Jones Lang LaSalle.

The Confederation of British Industry, an employers group, said this week it had "major concerns" over the rumoured changes to the capital gains tax. scronin@thenational.ae