http: / /www .thisismoney .co .uk /mortgages /buy -to -let /article .html?in _article _id=425195 &in _page _id=1 Id be interested to see what you guys think about this before I comment. The tax rate on profits from sales of holiday homes or buy-to-let investments has been slashed from as much as 40% to 18% from next April. The move fuelled speculation at Westminster that Labour rushed out a 'botched' pre-Budget report in response to Conservative tax proposals. There were further signs of disarray when Gordon Brown was humiliated by David Cameron in a Commons clash today. The cut in capital gains tax announced by Alistair Darling yesterday was mainly aimed at increasing the tax paid by wealthy private equity bosses who currently enjoy a 10% rate. But tax experts said it had inadvertently handed a major tax break to second home owners and will save them thousands of pounds when they sell. Andrew Goldstone, head of personal tax and estate planning law at Mishcon de Reya, said: 'It's a massive tax cut for property owners. Hardly what you'd expect from a Labour government.' Owners pay CGT - a tax on the difference between the price they paid for an asset and the price they sell it for - on all homes except the one they live in. The rate is currently 40% for the first three years that the property is owned, falling by two% a year to a minimum rate of 24% after 10 years of ownership. As well as hitting private equity bosses, Mr Darling's new flat rate of 18% is designed to simplify the system by bringing the rate for business and non-business assets such as holiday homes in line with each other. Experts said the move looks certain to boost the property market next year, although it could mean a dramatic drying up of supply until April. Liam Bailey, head of residential research at Knight Frank, said: 'This will help underpin demand for second homes and prices of second homes. However, the second home market prices are very expensive in most parts of the UK and affordability is the key to demand.' Someone buying a holiday home or buy to let property for £200,000 and making a taxable gain of £100,000 previously faced a bill ranging from £40,000 to £24,000. Under the new regime, they will only be liable for £18,000, a saving of up to £22,000. Chris Norris, policy officer for the National Landlords Association, said: 'We're very happy with what we've seen. Our members will be able to understand the system more clearly and make some savings.' Mr Darling also made changes in inheritance tax to make it easier for married couples to shelter up to £600,000 from the taxman. The tax free allowance for couples will go up to £700,000 by 2010. Richard Proctor, partner at Grant Thornton, said: 'Overall, it's very clever - it helps to deal with the inheritance tax problem for Middle England.'

It's a sensible solution but it could do quite the opposite of boosting the property market if many BTL owners hitherto discouraged from selling their properties are encouraged to market them-

I am in the progress of selling one of my portfolio of 40 properties. The day before the budget statement my accountant told me that she hoped I would only have to pay 10% CGT because I had been running the portfolio as a business and that she beleived this should attract Business asset taper releif - she's investigating as I write this. When I heard about the new CGT plan I therefore felt I was going to pay 8% more than she had been hoping was the situation. Does anyone know if this is correct? The difference seems to be that a 2nd home asset is treated differently to a business asset.

My understanding, based on advice from my account, is that BTL (unless you provide short term or holiday lets)irrespective of how many properties you have does not qualify for the business rate taper relier. So you may be better off waiting. Perhaps colin could provide a definitive answer.

The CGT change is welcome - I wonder if the unintended consequence of allowing BTL and 2nd home owners to sell for much lower CGT than before will ultimately be removed - like the 0% Corporation Tax for UK companies turning over less than £10k which lasted two years before it was reversed. The IHT is simply acknowledging what most clever people with assets already do - it's perfectly possible for married couples to get £600,000 IHT allowance *today*, with a bit of planning and a discretionary trust. As always, the devil's in the detail ..... for example, I wonder if the annual personal CGT allowance will remain? But on the CGT front - great, sell up while you can! Andrew

Julian, I'm with you. As far as I was concerned I was going to pay 10% with taper relief (confirmed by Colin incidentally) so this makes me worse off. Huw

thanks Huw. Who is Colin? BTW I've now let both my properties in Bratislava having had them completely renovated by your contact there - Brian. He did a good job and I'm feeling very pleased with the situation over there. It was more hasle than I had imagined it might be but now the hasle is over and I have 2 lovely period props in the centre and with the economy swinging along it feels worth it. Cheers Julian

Colin is Colin Davison the accountant recommended by PS (please don't take it as my recommendation). Well done on your Bratislava places. I'm pleased the way mine has worked out too. Some hassle but Brian was very good. I'm still convinced they'll be good investments. Huw