Reeves plan to tax houses over 500k PART TWO

Council tax money goes to the local council.
This would be in addition to that but paid alongside the council tax

Just like they outline in our bills what the money goes to pay for. This dum would say Central Government. Central Government would be in charge of what % they request and local councils in change of what they charge

Essentially the new tax element for Central Govermrnt replaces the one off lump sum. It would make it easier for younger people to move as they won’t have to find the lump sum Stamp duty. It will spread the cost.
However. If you’ve already paid stamp duty to buy your property you’ve already paid it. So you won’t have to pay again if you don’t move. Only if you do.

ps. This is a completely different proposal for the idea of removing PRR and introducing cgtax. That’s another proposal again. Alongside the above Stamp duty payment changes

double post

I think it would replace both and central government would distribute to the councils (enabling subsidisation of poorer councils but also enabling central government to use it for political purposes)

I don’t know how they would achieve it - you get a discount if you paid stamp duty on your purchase?

let’s face it, they’ll screw us all over in a heartbeat

But aren’t they talking about this replacing council tax?

Although what you say makes a lot of sense but is it really acceptable to have such a 2 tier system?

Council tax goes to local council. The ‘new tax’ to replace stamp would go to central Government.
Both paid yearly

If you’ve paid stamp already you don’t have to pay again
If you move and would normally have to pay a lump sum Stamp it would change to a yearly payment as a % of your house sale. On top of council tax

This is getting very confusing, assuming it is replacing council tax it’s got to be an annual tax or else if it is just levied on those moving and it replaces council tax it will be huge!

So what has moving got to do with it?

the issue for the elderly is that they can avoid stamp duty by not moving (as echt says there are health, wealth and QOL benefits too as well as a reduced burden on social services). They can’t avoid the new tax by not moving and if we are expecting it to replace stamp duty as well as rates it’s got to be higher!

our issues aren’t particularly that we are under taxed I think it’s more to do with misplaced spending.

(edited for typos)

It really isn't yet clear whether the proposal is for one annual merged land tax to replace SDLP and council tax, and clarifying this might influence our next housing choice.

Currently Cornwall pays the highest rates of council tax (5.5%) in England so shifting to a 0.54% land/property tax (mentioned for larger, higher value homes) would not make a great difference to our costs, even though we are 70. However, I'm assuming that SDLP would go; if not, then I doubt we'd move at all although we'd probably put in a lift.

If they move they’d have to pay that second tax. If they stay put nothing changes
in terms of Stamp as they’ve already paid it

So they’ll not move to avoid an additional annual tax

The suggestion was that a land tax would have to exclude the value of any property or what any property built on it might be worth because that would discourage people from carrying out improvement works for fear of increasing the value. A major flaw in this is that they’d have to employ a bunch of valuation officers to undertake the initial process which could take a year or more to complete.

It’s a really difficult one, as they say on the podcast even these changes are basically tinkering at the edges in terms of the budget “black hole”, raising nowhere near enough to cover the £40 billion figure being touted. The only things that will make a sufficient difference are things like putting up income tax and VAT, but they’re (I include Governments of all colours in this) all too scared and thinking only about the next election rather than the next 20 years.

Oh great!! I live in a tiny cottage with 1.6 acres.

Same. Steep ground as well, of no commercial benefit.

It will definitely stuff the elderly unless it replaces Council Tax. One effect will be to have them move out of the massive houses they all live in and downsize.
Away from friends, familiar surroundings, doctors, shops, etc.
There are reasons why some local councils try to keep older people in their homes, with modifications. It's cheaper and they live longer.

Oh, and the houses they'll seek are exactly the starter homes wanted by younger families.

The downsizing will kill off quite a few of them, but they're old, so who cares? Fuck 'em.

So it is an annual tax? It’s going to stuff the elderly. I agree stamp duty needs reform, thought about moving saw the price of stamp duty and it was very clear it was impossible for us to move, but don’t think this is the solution.

Oh great!! I live in a tiny cottage with 1.6 acres. Thanks for the link I’ll have a listen.

Thanks @CaveMum. That’s a very interesting listen.

Where I live a modest property will be above 500k so it very unfair and the house prices are constantly rising.

They talk about this, and other swirling tax rumours, on today’s The Rest is Money. Discussion is about 30 mins.

https://podcasts.apple.com/gb/podcast/the-rest-is-money/id1703785141?i=1000723358280

Basically they agree that Stamp Duty and Council Tax need significant reform and that an annual tax based around values would be better, but that it should be on land value rather than property value.

A property tax like this is another form of social cleansing. Everybody knows nice areas attract higher property pricing therefore under this scheme higher tax which many will not want to/not be able to pay as they’re cash poor.

The one I saw was higher rate taxpayer and property over 500k. That’s 120k people

but then the threshold will change to everyone and the amount will change

and why the higher rate tax payer? Don’t they realise HNWI manage their finances so they’re not!!

They will start by picking on newly bought properties first, then it will widen to include everyone.

Well, everyone who works and pays taxes, that is.

There is a move to widen the tax base. It is coming for everyone, regardless if people have been in their houses for 50 years or are buying next year, mortgage free or in debt to their eyeballs. They will start by picking on newly bought properties first, then it will widen to include everyone.

I think people hate the idea because Labour is proposing to implement it. We don’t give a shit where it came from.

I work in tax and do a lot of research into these sorts of policies. Anything with any sort of threshold introduces ways of getting out of the tax. Anything that taxes transactions prevents transactions. It’s so daft to only introduce the tax over a certain threshold.
Whet will happen if this tax is introduced? People in houses over £500k won’t move. There will be a glut of houses for £499,999. It’s so obvious. Why do this?

I could see house builders selling the basic shell of the house for £499 (a bit like a Ryanair flight) and then everything else would be added on (cooker, toilet, radiators etc) so that they are not included in the basic house price

I just don't buy this proposal or think it is workable in terms of raising more tax. Cornwall has the highest rate of council tax in the UK, at 5.5%, despite being a low wage/income county. I already pay £3900 pa in council tax for a (very nice 4-bed) home and we have lived here so long we have never paid stamp duty either, because it didn't exist when we last bought a house. We are planning to move because we're fed up with the M5 traffic jams in summer. But I don't hate where we are so if the rule change is significantly bad news for us, then I probably won't bother with the move at all, and HMRC will get nothing at all.

I work in tax and do a lot of research into these sorts of policies. Anything with any sort of threshold introduces ways of getting out of the tax. Anything that taxes transactions prevents transactions. It’s so daft to only introduce the tax over a certain threshold.

Whet will happen if this tax is introduced? People in houses over £500k won’t move. There will be a glut of houses for £499,999. It’s so obvious. Why do this?

It's hardly a tweak to the threshold. The percentage difference between houses worth less than £125k and those worth £500k is massive.

It means the vast majority of people currently pay stamp duty whereas a minority of people will pay the new property tax.