Budget 2010: Equity release customers to be hit by taxes?

People considering equity release may put off their plans in the wake of the emergency Budget announced yesterday.

Chancellor of the exchequer George Osborne increased the capital gains tax (CGT) rate from 18 per cent to 28 per cent.

This move is expected to have severe consequences on the housing and property sector, suggested the Royal Institution of Chartered Surveyors (Rics).

It may even begin to affect home equity release schemes.

Responding to the latest budget, Rics director of external affairs Mark Goodwin said: "The combination of raising the rate of CGT and VAT (value added tax) may limit growth and cost jobs in the sector."

The tax rises would further hinder the entry of new landlords into the buy-to-let property sector. Moreover, it may also slow down the supply of sites for constructions, he warned.

However, the CGT being capped lower than the income tax rate has been welcomed by 46 per cent of intermediaries, according to a recent survey by Kensington.

Ashall Glover Financial Services are equity release specialists

Posted by Patrick Ashall