Should Labour abolish the two child benefit cap?

[changefromhr]

In two minds about this. Yes for those who find themselves on benefits after having more than two children (job loss, divorce etc) but perhaps not for those who choose to have more than two children when they have never worked (disabled families excepted).

https://www.theguardian.com/society/article/2024/jul/11/uk-two-child-benefit-cap-affected-1-6-million-children-last-year-figures-show

By definition they won’t be paying capital gains tax if they have made a loss, they will only paying it if they have made a gain on the property ie. They sell it for more than it cost them to buy

No, but the pp said they were renting out at a loss because of high interest rates. In that case, the increase in house value is what brings them into profit overall.

CGT won't take into account the losses you've made on the rental - only the change in value of the property - so that could push you overall into loss.

Private landlords aren't the issue - we need rental homes. Not everyone wants or needs to buy - if you are eg moving house you might need a short term rental, same if god forbid your house is flooded or has a fire.

My main issue is that there are thousands of empty homes, and over a million second homes. It would be good if our new government would do something about those. We might be able to get about half a million "new" residential properties before we need to build any more. I don't disagree with their plans to build on "grey" belt land, but disagree with the narrative that we have too few homes.

Childcare expenses allow you to work and contribute to the overall financial pot.

Benefits are just there for having children.

That's the difference.

I think there should be an incentive and reward for work, especially women, as I think it's better for mums to work and not be reliant on men. Rather than just saying "oh you've had a child, here is some free money". No, quality childcare, education and healthcare are much better ways to spend taxpayers' money.

Yes they also provide a service via work.

Don’t be unnecessarily pedantic. There are many kinds of financial losses not just the loss on the sale of the property. Some landlords may only have a single property to let, perhaps because once they married and did not need the bachelorette pad anymore to live in, gave up work to raise children, and then were hoping to rely on the income, from rental or sale, to fund a pension. But with the cost of interest payments so high, cost of living etc, giving up the property sooner than expected changes all the plans they might have made for the pension - shouldn’t people be encouraged to make provisions for them selves in this way?

In general, can we stop slagging off landlords, branding them all as evil? It’s lazy and naive. We should be encouraging people to work hard and make plans for themselves for their financial security.

Landlords are not one single entity, they are not the council, they are not government, they are not running charities, they do not owe anyone anything.

Some of them aren't great though and dodge paying capital gains tax on their properties

Incidentally, that's why rents are generally lower as a proportion of purchase price in areas with high house price growth. Because when someone is deciding whether to buy/keep a property to rent versus investing the money elsewhere, they choose the investment with the highest return (simplifying a bit).

The rental property return is rental + capital gain. In the extreme case, the landlord might well accept a below-cost rent, if the expected house price increase is high enough. Expected house price growth is part of what sets the market rates. It isn't some unfair freebie which landlords get.

Do you mean fraudulently? It seems an easy type of fraud for hmrc to spot, given that sales prices are registered.

Much easier for tradesmen and other grey-economy workers to hide tax evasion by working for cash.

Do you look down on all plumbers because some of them do some work for cash in order to avoid tax? Personally, I only judge the individuals who are breaking the law, not the whole profession.

I’m not being pedantic your post said “sometimes at a massive financial loss due to capital gains tax”, why mention capital gains tax if it’s not relevant

CGT is relevant but not only in the way you are referring to. Btw, I’m a charted accountant that’s grown up in poverty conditions on a sink estate. So I know what I’m on about. Thanks

@strawberrybubblegum

Do you mean fraudulently? It seems an easy type of fraud for hmrc to spot, given that sales prices are registered.

The tax evasion mostly due to the landlord "pretending" the property is their home, either for the entire duration of their ownership, or them "electing" it to be their home for certain periods of ownership. Thus claiming main residence relief against CGT. That's a lot harder for HMRC to spot and challenge, especially going back into time when HMRC had no easy access to records of the addresses of properties that were being rented out as landlords don't need to put the address of let properties on their tax returns, so someone with several properties will just show total incomes/costs for all their properties, so without opening a formal tax investigation, HMRC won't know which properties relate to the declared rental profits.

Thank you Bad bunny

That's what I was driving at

Mumsnetters who earn lots of money never grow up in council estates do they? Always sink estates.

Encouraging poshos to have more children and poor people to have fewer children would do a lot to combat inequality.

Poshos?

Wealthier people.

It’s the level of education we are battling with in the UK right now.

What way is it relevant then? I agree with your other points but not the capital gains one. I’m also a chartered accountant who grew up in a single parent family on free school meals

Ah, I see...people who can actually afford to financially support having children then.

Quit the poverty point scoring ladies! Given that all of MN is UMC, one of you is a book keeper and the other is an estate agency negotiator. Obviously, you are both brilliant at what you do.

Because, once paying the CGT on whatever uplift in the value of the property since initial purchase, may not leave enough for a one-property landlord to finance their retirement in the way they hoped and worked hard for, and so hold onto the property hoping for the market to improve for sales, and have to top up rental income out of pocket to cover the mortgage payments, particularly if they are higher rate tax payers who have 40% of the property income loped off before they pay the mortgage. So, if you earn £1000 rental income, on a mortgage of £800, you pay £400 in tax, leaving you £600, and then you pay the mortgage, leaving you -£200, which you top up from your day job. And this is before you take away service charge and letting agent fees, etc. So many one-property landlords and stuck making a decision as to whether or not to take one big hit or a thousand smaller cuts.

What’s your point?? Let me decide the word I use to describe my life experience, thanks.

Haha! This made me laugh! Sorry, not meaning to poverty point score. (And don’t know what is meant by UMC..)

Definitely! I really don't understand why this is not how the system works....I work with disadvantaged families and have witnessed so many times the essentials not being provided despite them getting enough benefit money to afford these, and the money instead being spent on the extras (or drugs/alcohol) then they go down to the food banks!