The IPPR (Institute for Public Policy Research) latest proposals for buy-to-let landlords will mean they will have to pay more capital gains tax.

Needless to say the Institute's plans will be condemned by the sector as capital gains tax revenue will be dramatically increased over the next few years through BTL property sales.

Over the last two years CGT receipts have massively increased due to the many property taxes that have been recently imposed.

Increasing numbers of landlords have reacted to the government's reducing their returns by selling up and leaving the sector, which has resulted in an 18.6% rise in CGT contributions.

The HMRC's latest figures show that there has been a significant increase in CGT contributions in 2018 -19 with a record £9.2bn, whereas the previous financial year's CGT receipts was £7.8bn.

There is the annual CGT exemption of £12,000 for all taxpayers, however those above that amount and are lower rate taxpayers have to pay 10%, and those on higher rate tax payments will pay 20%.

However taxpayers who sell their other properties, such as a second home or buy-to-let property have to pay 18% CGT lower rate, or 28% if on a higher tax rate. The IPPR is recommending that CGT rates on investment sales, BTL property sales and second homes should pay the same income tax levels.

The think-tank is recommending the government to virtually abolish the annual exempt allowance by lowering it from £12,000 to a paltry £1,000.

If the Institute's plans are brought in then it will mean that a basic rate income tax payer would be facing capital gains tax increase from as low as 10% which will be hiked to 20%.

Those earners who are on higher and additional taxpayer's rates would have to face paying CGT increases up to 40% and 45%.

Under a proposed major revamp of CGT, investors and savers would be liable to 'cough up' an additional £120bn in tax over the next five years.

Sarah Coles, personal finance analyst at an investment services firm, said: “The IPPR wants the government to ramp up the tax on savers and investors – both on the gains they make and any income they receive.

“It underlines how tax allowances and rates can change overnight, and the importance of wrapping as much of your savings and investments in Isa wrappers as possible - to help protect your money from tax, regardless of any policy change.

“The think-tank says its proposals are fairer than the current system. It underplays the fact that in reality, the vast majority of savers and investors pay tax on their income from work, they save and invest diligently for their future, and may pay a second round of tax on their investment income or gains.”