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TODAY'S OTHER NEWS

Big rises in property taxes expected to pay for virus spending

Hefty increases in taxes on the purchase and sale of holiday homes and buy to let properties are expected in the November Budget, leading newspapers claim.

The Times over the weekend, in a well-informed piece written by its political editor, said Chancellor Rishi Sunak was working on plans that would see additional homes sellers paying Capital Gains Tax at 40 or 45 per cent.

This would be in line with each seller’s own income tax liability, instead of the current 28 per cent CGT imposed in the sale of some residential property.

“Officials are now working on plans to equalise Capital Gains and income tax” a Whitehall official is quoted as saying.

Meanwhile the Daily Telegraph, which also has unnamed Whitehall sources quoted in its story, suggests Sunak is looking at simplifying inheritance tax in relation to estates. 

It’s been known for some months that Sunak has been calling for revisions to CGT, while there is no indication that the government will extend the current stamp duty holiday due to expire in seven months time.

In addition, the government has been lobbied by the Social Market Foundation, a think tank, which says tax on the increases in the value of homes would ensure the costs of the Coronavirus crisis do not fall unfairly on younger people.

The foundation - set up by Conservative peer Lord Danny Finkelstein - wants the Treasury to raise £421 billion over the next 25 years by imposing a new Property Capital Gains Tax on all homes sold in the UK. 

In return, stamp duty could be scrapped it suggests.

The new Property CGT could be set at 10 per cent of the increase in the value of the property since it was last sold, the foundation suggests.  

  • icon

    The size of the forthcoming tax grab will be like no other before. Worrying times.

  • Paul Barrett

    Yep LL intending to sell in the next 10 years should sell now.
    Take the lesser CGT hit now.

    The PRS will be decimated.
    No longer worthwhile hanging onto barely profitable rental properties for hoped for CG.

    Many existing owners will refuse to sell.
    They will improve rather than move.

    Not good news for EA who need property movements to survive

  • Richard Copus

    Before we all start to panic at these Socialist policies supposedly to be implemented by a right wing Conservative government (which means they probably won't happen), we need to look at the trees in the wood.

    "The new property CGT could be set at 10% of the increase in the value of the property since it was last sold". House price inflation as we knew it in the past has gone for good. The average house value (if one excludes London which ought to be treated a special case in future) is around £300,000 or less. If that increased by 50% in 10 years CGT of £15,000 would be payable - not much more than the stamp duty now. (Outside London house prices actually went up by only 30%-35% in the last 10 years). If one moved more regularly the CGT would be much lower, so the new regime would encourage house moving which is what our industry is all about. The fact that CGT would also encourage house price stability would be a good thing for most people. OK, properties over around £1.5 million would pay more than they did before the stamp duty holiday, but they are a fraction of the stock. And you can't tell me there won't be relief for the aged selling up - the Government won't want to pick up the care home bill!

  • Paul Barrett

    We are not talking about PPR here we are about investment properties which prop up the housing market.
    You DON'T want or need LL exiting as fast as they can.
    The supposed massive hike in CGT on 2nd property investment will totally muck up the housing market for the bad.

    Matthew Fine

    It feels as if any change in the market, be it taxation, price rises/falls, section 21, for you it will all end in the death of the market. Having been in agency for the last 37 years I can honestly say you are talking tripe. I appreciate your concerns but best keep them to yourself Paul.

     
  • Paul Barrett

    Interesting you consider my concerns tripe.
    I consider you are wrong and I am right.
    Which is why I am desperate to get out of letting property and have been since 2015.
    You clearly underestimate how significant the PRS has been in supporting property prices.

    Attacking 2nd property owners will have a devastating effect on values.
    There is no point if 2nd property owners are stung for excessive CGT.

    The whole investment dynamic will be upset and that will impact on the normal residential property market.

    Remember those who choose to sell up DON'T need EA to list anymore on the major web portals.
    So EA won't even get anything out of any sale as they will be bypassed.
    I DON'T need an EA to list for free my property I wish to sell on RM and zoopla etc.

    Believe me increased CGT etc will fundamentally transform the property market and not for the good.



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