Rachel Reeves considering charging CGT on sale of main residence?

[Another76543]

It’s being reported today that Reeves’ latest idea is to tax homeowners on the capital gain made on the sale of their homes, where that home is above a certain value. From The Independent

“Rachel Reeves is considering hitting the owners of high-value properties with capital gains tax when they sell their homes as part of an attempt to fill a £40bn hole in the public purse.
The chancellor is said to be looking at ending the current exemption from capital gains tax for primary residences as she seeks ways to raise cash in the face of dire warnings about the state of the public finances - a move that would be seen as a "mansion tax".
Such a move would see higher-rate taxpayers pay 24 per cent of any gain in the value of their home, while basic rate taxpayers would be hit with an 18 per cent levy.

Sources told The Times that under proposals being considered for the autumn budget, the private residence relief would end for properties above a certain threshold.
The threshold is said to still be under consideration…….. “

In investment properties, capital improvements are tax deductible against CGT. Maintenance costs are tax deductible against income tax (for individuals).
It will have to be different for main residence where there is no income tax on main residence.

Unless they are going to have some unique system for all high value property which goes into both income and capital gains taxes somehow.
How can you possibly charge people outrageous amounts of local property tax with no regard to their actual income and wealth.

I think I know where this is going now. There will be tax forms for all the vaguely rich on everything. There is no other way of doing this. At least it may get rid of the anomaly where the HENRYS are screwed and not having children.

Anyone earning over 100k will be filling out tax forms with everything and everyone owning a property/wealth/investment worth above 750k should be filling in tax forms. Not sure how to treat the pension pots and final salary pension schemes, but again, should be thresholds for those. It is the only way to start making the tax system fairer for all.

I disagree. I suspect, if they implement this, it would be the same rules as to what is a capital improvement and what isn't.

if you put new heating/windows in - you get the benefit of them while you live there. Lower heating costs etc. but they also have a limited time of adding capital value. A brand new heating system may offer a capital improvement but after 10 years? Not so much!

of course they might go back to how cgt was calculated until early 2000's. Where there was relief for how long you held an asset.

tax policies like this are not about raising revenue. Cgt can easily be avoided by just not selling the asset. Policies like this are about influencing taxpayer behaviour.

like being rewarded for holding assets for a long period of time - both indexation and taper relief. It was see

Not sure how to treat the pension pots and final salary pension schemes, but again, should be thresholds for those. It is the only way to start making the tax system fairer for all. @Araminta1003

What do you mean by this? You still pay tax when drawing down from your pension, whether that be a DC or a DB scheme. And there are many thresholds for putting money into them. IHT now due on inherited DC pots (subject to thresholds) and recipients of any DB spousal pension will also pay income tax on it.

What more do you want from my pension that I have diligently saved for all my working life?

What does 'fairer for all' look like to you?

It means fairer between the generations @Chewbecca
There is immense value in pension pots. Monetary value can be assessed. If all income is taxed and housing and wealth, then surely pensions should be as well.
If I have stashed 3 million into my private pension instead and move abroad to enjoy it and avoid inheritance tax, but someone else stashed into into their house, why exactly would it be fair to only tax the person with the house when they leave. Makes no sense.

You do know pension income is already taxed

👏👏

It means fairer between the generations

It really doesn’t.

Someone made the point that some people have put all their wealth into housing instead of their pension. So to tax them on that decision, versus someone else who went all out on their pension, but overall asset value is the same, makes zero sense.
The whole point is to look at people’s complete wealth and income, not just one random facet of it. People should not be paying more tax relative to someone else who is just as rich or as poor.

The money invested in a pension is taxed on draw down.

Housing is effectively also a dead investment.

A pension is mainly invested in equity, which helps the country to grow and GDP.

A house merely helps housing wealth and actually makes working and living in the uk hard for someone who doesn’t already have a property.

Pensions are taxed. To date, the primary residence CGT exemption has actively encouraged people to use their house as a pension, which is terrible for the economy in numerous ways.

Per my earlier comment - pensions already are taxed. You want more?

Thanks Blossom of course it doesn't
For a start
those starting out today get the benefit of employer contributions to pensions
That was only compulsory from 2018

Most of us were putting in a minimum of 2% just to pay for the management fees of a pension alone
If there was an employers pension one employer wouldn't take on another’s
So you moved jobs or lost it because you had the audacity to have a baby and you had to start a new pension and the other one got shelved losing 2% every year in management fees till it ran down to zero
I lost 2 pensions like this

So
Think again who ever spouts we had it better

So then rich and poor alike should pay the same % on all assets

Well you stop paying NI when you reach state pension age.

Nobody can claim someone with a 1 million pension pot is poor. I am just saying a 65 year old with a 1 million pension pot versus a 65 year old with a 1 million house who will only be getting the state pension should be treated equally for tax purposes. So allow the contribution of housing wealth into pension pots, for example, if they want to introduce CGT on main residences.

If you move your pension abroad it is all incredibly complicated, subject to double taxation agreements etc. There are already 1 million British pensioners taking state pension abroad. Some are getting triple lock others are not.

“So then rich and poor alike should pay the same % on all assets”

No taxation should be progressive. But someone equally rich to someone else, taking into account all assets classes, should be paying the same otherwise you get anomalies and disincentives in the system.
Progressive again to the extent that it does not cause generational conflict either. Don’t shoot the messenger. We are coming to the era of Millenials being in charge and this is all going to change as it is not sustainable long term. So one can surely agree on the principle of fairness between two people of equal wealth and income overall of the same age.

“A pension is mainly invested in equity, which helps the country to grow and GDP.”

Except the investment in British equity and companies has taken a nose dive in favour of overseas equity (which often does not even attract stamp duty) and speculative gain. So often it has not been benefitting our economy, but has been eg benefitting the US economy.

cgtax on a home would only be relevant if you sell it
So People won’t if they are going to pay out louds then louds again on death

They'll sit tight and pay it all on death alone

Agree on fairness in terms of wealth but not taxes on a home. People simply can’t pay higher taxes just because they live in a more expensive property and should not be forced out of their home to do so.
When they die their assets are taxed so the Govn get some money in the end anyway
and when they are alive they’re current ( all be it out of date) council tax system charges based on property value also.

In terms of income tax I don’t believe there should be cliff edges. Countries with one income tax across the board with no or only tiny tax free amounts are fairer imo. Everyone pays the same and we don’t get people cutting down on work and one section of society bitter towards another and struggling in the middle.

This country is bitter towards both real and perceived wealth and it’s sickening listening and reading of it.
If we want to grow the economy we must invest in it and encourage a work incentive to better oneself.

So I believe in everyone being treated the same and not a sliding scale of the so called well deserved
We might all actually stop whinging about each other then aswell

Totally agree

This country is bitter towards both real and perceived wealth and it’s sickening listening and reading of it.
If we want to grow the economy we must invest in it and encourage a work incentive to better oneself.

Growth is the only way out. Not stealing ever more from a dwindling number of suckers who are still willing to work hard.

I'm finding comments on higher earners "paying their fair share" increasingly galling.

We pay far, far more than our fair share.

Coming back to CGT on main residence - but only for middle class people in London and the SE (at least until inflation catches up in a decade or so, at which point it will also bite middle class people throughout the country as well as working class people in London and the SE).

I do wonder whether Labour have thought through the consequences for professional flight, or brain drain? A really high percentage of London professionals - in shortage industries, who won't be replaced - have links to EU countries, and have chosen to live in London for a while because they like it. Maybe one spouse is English, and the balance has fallen in the UK's favour for bringing up kids - but that does get re-evaluated at different education points. The choice is often quite finely balanced. CGT exemption on main residence is quite significant: it's a barrier to trying out living elsewhere, since that changes your exemption.

It's actually quite freeing. As all the incentives to do the 'sensible' thing are taken away, I can make choices which are riskier but maybe more fun.

This is exactly why ill thought out tax changes often do more harm than good and bring in less tax revenue than expected. No one seems capable of looking at the bigger picture and the entirely foreseeable consequences of poor tax policy.

That wasn’t really a “new” property tax, it was changing the way stamp duty is done. So instead of the buyer paying it, the seller pays it in houses over £500k