Anthony Whatling says uncertainty had already forced investors into decisions that should have been driven by commercial logic
Chancellor John Healey is expected to hold capital gains tax (CGT) rates at their current levels when he delivers the Budget on Wednesday, but a senior tax adviser is warning that the anticipated decision arrived too late to prevent the damage already done to investor confidence and transaction behaviour.
Capital gains tax is levied on the profit made when an asset that has increased in value – such as a property that is not a primary residence, shares, or a business – is sold or disposed of. Under current rates, basic rate income tax payers are charged CGT at 18% on residential property gains. Higher and additional rate taxpayers pay 24%.
Anthony Whatling (pictured top), managing director at Alvarez & Marsal Tax in London, advises ultra-high net worth individuals and entrepreneurs on complex personal tax matters, including the implications of property disposals and business transactions. He says months of pre-Budget speculation had already reshaped decision-making in ways that had nothing to do with commercial logic.
“If confirmed, this would be a very welcome decision and a much-needed signal of stability for business owners and investors,” Whatling told Mortgage Introducer, referring to reports that the chancellor is minded not to increase CGT on Wednesday. “Fears of a CGT rise have already prompted a rush to complete deals ahead of the Budget, with uncertainty driving decisions that should be led by commercial considerations. It is just a pity that the chancellor did not make this clear months ago.”
Stay ahead of the UK mortgage market. Subscribe to the Mortgage Introducer daily newsletter for broker news, rate updates, and the industry latest delivered to your inbox every morning.
What does Wednesday's Budget mean for CGT?
Reports have suggested Healey is poised to leave CGT unchanged at the Budget, having dismissed calls from some Labour MPs who had previously voiced support for a rise.
The anticipated decision represents a significant shift from expectations that had built steadily since the 2024 general election, and the prospect of a rate increase had been widely discussed as brokers warned Healey's Budget could have sweeping economic consequences in the weeks leading up to Wednesday. As of publication, no formal announcement has been made.
How does CGT uncertainty affect property investors?
Whatling draws a clear distinction between two types of property investor. The first chases rental yield, where stamp duty surcharges, the restriction of mortgage interest relief, and an incoming 2% income tax surcharge on property income are the dominant concerns. The second group, which he describes as accidental landlords, are entrepreneurs who have accumulated second homes, third properties and holiday lets, and who think carefully about net-of-tax returns at exit.
"If the amount of tax you're going to pay on the gain is potentially 45%, which obviously now has been ruled out, that would completely change the dynamic of whether it's worth having more property or not," he said.
The rush to complete transactions before the Budget had a direct effect on pricing. Sellers who accepted a lower price in exchange for certainty on the tax rate were behaving rationally, but the market paid for it. "As a more desperate seller, that probably depresses prices," he said. "You'll probably accept less than you would otherwise because you want to get that deal done."
Senior lending figures have similarly argued that the buy-to-let market is professionalising rather than retreating, with structural demand providing a floor under the sector regardless of legislative headwinds.
The case against a CGT rise – made by the government itself
The argument against raising CGT was effectively made by HMRC. A government bulletin published in June 2025, updated in line with the Office for Budget Responsibility's (OBR) March 2025 forecasts, modelled the revenue effects of illustrative CGT rate increases. The data shows that increasing the higher CGT rate by 10 percentage points would reduce Treasury revenues by £540 million in 2026 to 2027, £2.06 billion in 2027 to 2028, and £3.565 billion in 2028 to 2029.
The mechanism is straightforward. Unlike income tax, CGT is a tax on a voluntary act. "You can choose when you pay CGT because you make an active decision whether to sell or not," Whatling said. "If the tax rate goes up too much, people will say, ‘it's not worth me selling, I'll hold on’." Beyond a certain point, raising a tax rate produces less revenue, not more, because it changes behaviour.
What would a stable tax environment look like?
Whatling is clear that avoiding a CGT rise is necessary but not sufficient. A commitment to policy stability across the remainder of this parliament is what the market actually needs.
"What would be really helpful is if there's actually a statement around a commitment to not make any more changes until the end of this parliament, at least," he said. "Then you'd have two or three years when you can start making sensible decisions knowing that your investment calculations are not going to be changed or ripped up by a tax change in the short term."
Whatling also flagged concerns about a possible annual surcharge on high-value properties. Wealthy owner-occupiers with a home worth £5 million or £10 million might absorb the cost, but landlords holding multiple properties face a different calculation entirely, particularly when stacked against existing restrictions on interest relief and the new income tax surcharge on rental income. More concerning, in Whatling's view, is what such a framework could become.
"Once they have that framework in place to start charging what is effectively a wealth tax on property, if they need more revenue, it becomes quite an easy lever to pull," he said. "This could become something that is like a wealth tax more generally, which, if they're just taxing property, is going to have a disproportionate effect on the property market and on property investors."
Separately, Whatling flagged speculation around potential changes to stamp duty land tax (SDLT), including theories that it could eventually be replaced with a higher CGT charge on exit, lowering the cost of entry to the market while increasing the tax burden on disposal. He stressed this remains pure speculation, but noted that even the possibility of such a structural shift could meaningfully change how investors approach new purchases.
Brokers advising buy-to-let clients on yields that have reached a 15-year high may find that tax uncertainty continues to complicate those conversations long after Wednesday's announcement. The deeper problem, Whatling argues, is structural. Annual Budget cycles make long-term planning almost impossible, and one well-received announcement is unlikely to break that pattern.
“I suspect what will happen is that this time next year we’ll be having similar discussions and more debate about what might be changing.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
