Finding second properties taxing?

Posted on Jul 26, 2019

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According to a recent report in The Guardian from The Resolution Foundation, property wealth in Britain from second homes has risen by more than 50% over the past two decades to reach nearly £1 trillion. 

The number of British adults in families who have wealth from properties additional to their own homes has risen by more than 50 per cent this century to reach 5.5 million – around one in ten of the UK population.

However, a second home – or perhaps a third or fourth home – might not be the investment opportunity it looks; new tax rules are coming into play next year which will have a considerable impact on people who are looking to sell a second home. From April 2020, an owner of a second home will have to file a return and pay the Capital Gains Tax (CGT) due within 30 days. Up until then, owners are expected to pay the tax due by 31 January following the end of the tax year (5 April) in which the property was sold.

People with second homes have been targeted by government tax reformers over the years. In addition to these CGT changes, the amount of tax-deductible interest from rental income has also been increasingly restricted year by year. In addition to this, there are some other changes afoot, including new rules on private residence relief from April 2020. 

Many people buy a second home to enjoy time somewhere else, perhaps in the countryside or near the sea, but they might also think of it as their ‘pension pot’. We certainly wouldn’t stand in the way of a client who wants to make such a purchase but it shouldn’t be relied upon as a pension. For a start, there are more tax efficient arrangements out there, including an ISA or, indeed, a pension. 

The key thing is to seek independent financial advice, preferably from a Chartered Financial Planner, such as ourselves. The Goodman Partnership was one of the first Regulated Advisory Firms in the UK to achieve Corporate Chartered Financial Planning status and the first to achieve this in Kent.

This award is achieved and maintained by meeting the rigorous standards of professionalism demanded by The Chartered Insurance Institute. This includes demonstrating our commitment to developing and maintaining the knowledge and capability of our financial planners and the rest of the team. We’ve also adopted the CII’s code of ethical practice that places our clients’ best interests at the heart of the advice we give and everything we do.

For our clients, it’s further reassurance that our financial planners are highly qualified, experienced and knowledgeable. It also demonstrates that we’re committed to building our knowledge and skills, so that our clients get the most up-to-date advice available.

When it comes your pension investments, we can help lead you through the legislative frameworks to minimise the effects of paying unnecessary tax.

At The Goodman Partnership – which provides pension advice in Tunbridge Wells – we can help you to understand if your lifestyle needs can be met in retirement and how the different options of drawing benefits compare.



Goodman Chartered Financial Planners is a trading name of Fairstone Financial Management Ltd. Fairstone Financial Management Ltd., is authorised and regulated by the Financial Conduct Authority – FRN: 475973 Registered in England and Wales no: 05574120. Part of the Fairstone Group. Where you have a complaint or dispute with us and we are unable to resolve this to your satisfaction then we are obliged to offer you the Financial Ombudsman Service to help resolve this. Please see the following link for further details: