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The UK property market is abuzz with rumours of an impending capital gains tax (CGT) hike, and property investors are scrambling to sell their properties before the anticipated increase takes effect. This speculation has been fueled by the Labour party's pre-election promise not to raise income tax, VAT, or national insurance, leaving CGT as a likely target for the government's efforts to fill the gap in public finances.

Estate agents are reporting a surge in buy-to-let investors settling for quick sales at lower prices to avoid potentially significant tax increases. The urgency is palpable, with concerns that any tax rise could be implemented immediately after the budget, possibly as early as midnight on October 30.

Who Pays CGT, and Why Does It Matter?

CGT is a tax levied on profits from the sale of various assets, including property (excluding your main residence), businesses, shares, and possessions with gains exceeding £6,000. Everyone has a £3,000 tax-free annual allowance, but this has been eroding in recent years.

Basic-rate taxpayers currently pay 10% CGT on most assets and 18% on residential property gains. Higher and additional-rate taxpayers face 20% and 24% rates, respectively. Any increase in these rates would significantly impact property investors' profits.

Investors Rush to Sell Before the Taxman Cometh

Accountancy firms like Blick Rothenberg are reporting a surge in clients seeking advice on selling assets or completing transactions before the budget. The fear of missing out on potential tax savings is driving this heightened activity.

So Should YOU Quickly Sell Now?

Many are urging property investors to act swiftly to avoid potential financial losses. The government's history of implementing CGT changes with little notice, as seen in 2010, adds to the urgency.

So should you sell now?

No, the CGT increase doesn't keep me up at night. When your properties rise in value, don’t sell and pay CGT.
Instead, refinance your properties, this allows you to access tax-free cash that can be used for further investments or other financial goals.

This approach not only sidesteps the CGT issue but also provides a steady stream of tax-free funds. It's a smart strategy for building wealth without constantly worrying about the taxman.