Rachel Reeves considering charging CGT on sale of main residence?

So in just over a year, the 'black hole' Labour inherited has gone from £22bn to £40bn? And then because she won't deviate from self imposed rules, or make the hard decisions on welfare spending that are sorely needed, she's left casting about for increasingly desperate solutions?

I think they're leaking/briefing each idea to see what gets the most positive reaction from backbenchers. They're really in charge of the country now.

Which illustrates exactly how they do not actually want to improve the economy. The cynicism and dishonesty is exhausting

Firstly, it will be a tax on London and a few more expensive places - not just the “posh” areas, but a Victorian terrace in zone 2 or 3.

Also, if you bought your house many years ago, it will stop you moving to a similar value house elsewhere, if you need to. Unless they value all potential houses in this category at the point it comes in, it will be a regressive tax. I bet they don’t adjust the purchase price for inflation.

In London and parts of the south, it is not a mansion tax, but an everyday family house tax. It will destroy the market for these houses and people will find themselves stuck in unsuitable houses.

Also, even if they allow people to offset the costs of improvements, people won’t necessarily have suitable records before it’s bought in.

i think it would be more fair to update council tax bands and tax locally - to be spent locally.

@RavenPie

Your equity won't be taken in tax. CGT is on the "Gain" i.e. difference between purchase price and sale price, so it will be x% of that gain, not on equity.

I’m against anything that snarls up the housing market further. People need to be able to move for jobs and it shouldn’t be so hard for people to increase the size of their home when their family gets bigger and then downsize when their dc move out. It also makes divorce and separation much more of a pain. I live in a 5 bed and would like to downsize in a few years to help my dc buy homes of their own but if my equity is taken in tax I won’t have that incentive. For lots of people downsizing is part of their retirement budget and it’s unfair to allow people to build up equity during their working lives without them knowing it will be taxed to buggery once they try to release the equity. I’d rather an overhaul on council tax which would encourage downsizing and not punish people who need to relocate for work.

VAT on hospitality has played a huge part in the collapse of the hospitality sector over the last few years. The sector is a big employer so shouldn’t be shafted further imo.

Yes! She has no other option. The economic literacy is playing a distinct second to political literacy which she’s failed at for over a year.

There goes that strategy of using my home to downsize when the kids are gone and use the hard earned equity [by investing in improvements] as my pension plan.

I don’t think she’s looking for a tax that’s fair, she’s looking for a tax that the backbenchers won’t rebel over.

She is a politician and wants to survive. It looks like her own party will not tolerate cuts. The right wing already hate her guts; what’s in it for her to do something to please them and piss off lower to middle income workers? Nothing. If she touches income tax she will be cut to ribbons. CGT on million pound homes? Nothing like as bad.

She can piss off Spectator readers. Or farmers. Her party have made it very clear what she needs to do.

No, it will deter people from downsizing and it will probably push house prices up even further.

They tried. They failed. I mean imagine you are Rachel Reeves and you see horrific figures claiming sickness and disability. You attempt cut but your own party says no. I don’t agree with Reeves but she is totally stuck. All she has left is classic asset tax.

Which is why I said she needs to just come clean and say the situation has changed since we did the manifesto and we need to do something different.

This policy also makes NO sense.
If people have to pay cgt they are effectively blocked from moving unless they want to move to a less desirable area or smaller home OR have 100k or so lying around to offset the cgt AND pay the exorbitant stamp duty....

I feel like they got a load of yr 9 students and asked how they should raise revenue....
Although at this point in time i think even 14 yr old know you should be taxing wealth not income.

Punishing and pushing away the core net contributors ie people earning over 100k who live in London is asinine. No wonder half the people in my office are looking at emigrating.

I dont know what the fuck they plan to do when all the high income londoners piss off because they totally over busting their arses working 60hr+ weeks to pay effective tax of 60%+ and all labour are left with is net receivers and rishi sunaks and oligarchs who pay fuck all tax...

I've said it before but NO amount of money raised via tax is going to fix what they have got. We have more net receivers than net contributors it is not a sustainable model.
The abuse government funds is totally out of control... unless they overhaul the system, identify bad actors most effectively and reign in spending its a waste of time.
Any private company thst behaved like the gov would be bankrupt 1000 times over.

They do not have the balls to address the welfare system. Without that it really is just a spiral. We cannot keep taxing the same small % to support the growth in welfare.

That will apply to many people. But if you look at who Reeves wants to tax then she has been pretty clear that excludes taxes on working people (whatever that means) so has been explicit about not income tax. That really does only leave asset based taxes which was the flip side of the manifesto she wrote. So she’s not going to touch income. But assets are up for grabs (see farmers…)

My point is that the accumulation of wealth can be “accidental” in some respects. We bought our first marital home in the late 90’s, by the time we sold it in mid Noughties it had tripled in value. We benefitted only because we happened to be alive during that period. No commensurate change in disposable income during the same period!

No, those can be deducted under the current CGT rules for properties that aren’t your main home. I doubt they’d change any of those rules, just remove the main residence exemption for high value properties.

I don’t see why you wouldn’t be able to deduct whatever costs you can currently deduct when calculating CGT on a second home. So your annual allowance, selling costs, costs of improvements. Not property maintenance though.

@Chewbecca whereas in Scotland we get prescriptions and uni free but as a higher rate tax earning couple, we are £7k worse off than we would be in England p/a.

Well… do you think Reeves would have much incentive to agree to that if she wants money? I would think not

And what about home improvements? Buy a crumbling wreck house for £1m. Invest £1m doing it up and improving it (and paying VAT on those improvements) - sell it for £2m and get hammered?

Carry on.