Ndubuisi Egwim shows how UK tax changes have made buy-to-let far less attractive than ISAs for higher earners. The CGT exemption dropped to £3,000 and residential property now faces 24% tax, while ISA growth stays completely tax-free. Maximize pensions and ISAs first.
The lesson is this: the tax wrapper matters as much as the asset itself. But what 25 years of real data shows is that the UK tax system has made buy-to-let significantly less attractive for higher-rate taxpayers than it used to be. The CGT annual exempt amount shrinking from £12,300 all the way down to £3,000 changed the exact picture when you sell. The 24% CGT rate on residential property changed it even further, introduced in 2024. And throughout all of this, the ISA wrapper has remained completely untouched. Zero tax on growth, zero tax on income, zero tax on exit. Every single year. Now, for a doctor in the 60% tax trap between $100K adjusted net income and $125K, $140K, every additional pound of rental income makes that situation even worse. The lesson is this: the tax wrapper matters as much as the asset itself. She won because her investment was inside the most tax-efficient wrapper available to UK investors even as we speak, and she used it consistently for 25 years. Second, max your pension and your stock and shares ISA before you even consider buy-to-lets. What you get with that is that you get 40% tax relief on pension contributions, and then you also pay zero tax on ISA growth and exit. For me, this comes first every time, every single time.
