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…….. “

"Only 880k"

I love in an expensive desirable part of the country. That's still more than my house is worth.

It's an argument that's difficult to make with a straight face.

House prices can go down as well as up but people still seem to forget this.

I don't agree with the policy as such but making the argument that you "only have £880k" is a little crass to say the least.

£880k will still buy you a reasonable property even in London.

The “gain” is part of the equity. I’ve been in my house since 2001. Some of the equity is my mortgage payments, some is the rising market (which whatever house I’m buying after this has also been subject to), some is due to improvements I’ve made which have incurred varying expenses. I’m aiming to sell in 3-5 years and some of the things I am doing now are specifically to add value to maximise my profit. If I’m being taxed on work I’ve done and paid for then I should have been told before now. I also should have been able to assess whether things I’ve done myself on the cheap I may as well have saved myself the bother and paid someone eg my driveway which I was quoted £8K for and managed to do as diy for about £1500 (I’ve no receipts so is it deductible or not? My brothers and sons who helped out were “paid” in takeaways and beers). It’s simply not reasonable to tax people on a “gain” they’ve made when they bought a 4 bed 2 reception room, 3 bath house with parking for 2 cars in 2001 when they are selling a 5 bed, 3 reception room, 4 bath house with parking for 3 cars in 2028 as if they haven’t influenced the “gain” or incurred any expenses at all. An annual land tax for living in a whopping house I could deal with just like I had to put up with driving a stupidly large car for years because I decided to have lots of kids but disincentivising downsizing and home improvements stagnates the market.

Beside which, a person approaching 67 now who has paid off their mortgage on an “average” house worth £290k, will have paid around £19k for their “average” house in 1980 when they were 22. They will be taxed on the gain of £271k and not taxed on the £19k they have paid (is mortgage interest deductible? Is overpaying worth it anymore?). Tax on £270k that you thought was tax free isn’t insignificant just because it’s “only” on the gain. The proposals seem to just be covering more expensive homes atm but the principle is the same. If you are older and depending on the money released from downsizing to retire in then you are fucked.

If it’s ctg it is the gain, like it is on properties which aren’t primary residences. It’d be removing the exemption on the latter for more expensive properties.
it seems like a bad idea to me because it’s not something people will have factored in. Also unclear if the ‘gain’ would be a true gain versus inflation? Something seems very wrong if a person wants to move to an equivalent house elsewhere (eg for work) or even downsize and between this tax and stamp duty they might end up out of pocket.

The labour government need to stop with these stupid ideas, and in particular reverse the anti-growth increase in NI especially that imposed for lower paid workers. They need to confess they made a promise they can’t keep.

Struggling on £300k per year combined. 'Only' got a five year old polo. If you are paying £6500 on mortgage and childcare, you haven't really done great financial planning there have you?

You then pay another £4k a money on everything else?

And you're NOT living like Kings?

Have you stopped to think what everyone else is spending?

Sometimes I wonder what planet others live on.

If it happens, it will initially be set at £1.5m. After the next election, the incoming Chancellor will lower it to £1m. And, just like that, the principle of your own home being free of capital gains tax will be gone.

Oh, and with council tax set to be levied on property value, the Government will have the option of taxing you on what it deems your house was worth, not what you sold it for.

But it is meaningless if every other property has also gone up. Unless you move to a much cheaper area. Many older people will want to downsize in the same area to be near friends/GP/family/amenities. By the time all the costs are paid, they might as well stay put.

It will lead to lots of larger homes being split into flats which will have higher combined values without the tax.

This is so depressing. We live in an area where houses are very expensive.

We’re only still here as elderly parents need our unpaid care.
Our mortgage is extortionate and essentially our house is our pension as we don’t have funds to save or add to pension pots.
We don’t go on holiday, go out socialising at the weekend or spend any money on clothes or hobbies. And we have 3 ND children, varying ages & 1 ND grandchild.
We’re not living, just existing.

Well it's a moot point... no political party seems particularly interested in our vote or in retaining the >£140k per year tax we are paying but i imagine they'll miss us once we're gone

Either way cgt on your primary property is a dumb ass idea...

Well if you don't socialise or go out, it'll be fine. You won't miss London will you?

When you retire your parents will no longer be around and you'll be able to relocate to another lovely bit of the UK and still have plenty of money left for your retirement.

Problem solved.

She doesn’t say she’s struggling - she’s just saying it’s… unremarkable.

And it probably is - say £4k of her £6.5k is mortgage, that’s about £750k of borrowing. Thats not buying you a house in an exclusive part of London, and is still going g be ~1/3 of their income after tax, pensions etc.

She’s better off than most - but you’d think someone with a £300k income would be living in a huge house with a nanny, two expensive cars on the drive etc etc.

In London that just isn’t achievable on that income now - which presents a problem, as it’s obviously a large household income. What is the incentive for someone like OP to stay in the UK if the lifestyle she can afford as the ‘1%’ is just… fine.

As for everyone else - sure they’re in a worse position - but the point here is that this is yet another policy targeting ‘those with the broadest shoulders’ who are already questioning if the tax burden is fair, and have more options than most to go elsewhere.

I'm going to repeat what I said before

"Do you ever wonder what planet people saying things like this are on?"

Honestly, it's so unbelievably out of touch it's untrue.

£300k house hold income

"Unremarkable"

Only £4000 in mortgage. Only £750,000 property. ££4000 to spend on bills and luxuries. And there will be another £2500 a month when the children are in full time education.

Meanwhile there will be people reading this who earn £12000 A YEAR and have no housing security at all and live in a really shitty area.

It's tone deaf. Utterly tone deaf.

I say this as someone who has a reasonable standard of living and income and I still think it's utterly deluded to say out loud especially.

There isn't a violin small enough.

I don't disagree with you on the principle of the tax.

I do think it's utterly deluded to think you can continue to get away with not paying more tax regardless of your high income.

The way people earning over £150k think they and everyone else earning over £150k can just move abroad and be paid the same does really rather amuse me.

No, lots of people who earn that much will not be able to move even if they want to.

It’s a policy suggesting taxing the primary residences of people with higher value homes - of course people who actually own those (or have an opportunity to own those) are relevant.

The entire tax policy of the UK can’t be based around ‘what do people working part-time on minimum wage or solely existing on the state pension want?’.

It is not ‘tone deaf’ for the people generating more of the tax income to fund the support these groups can claim from the government, having a view on how they are taxed, and what is fair.

OP is literally being incentivised by the government already to work less and pay less tax…she’s already got an 80% rate on a big % of her income… and they’re suggesting another policy to increase her tax bill. Of course that’s going to annoy her.

A £300k income isn’t unremarkable (and I never said it was), a £750k property in London is going to be pretty unremarkable though yes. I think the average cost of a house in London is now something like £650k.

But, few people can or will sell before the budget. And this measure, implemeted will mean most people will just sit tight. That not only raises zero additional CGT, it also massively reduces the amount of Stamp Duty collected in the short term. As a way of plugging an immediate, self inflicted, shorfall in government income it's up there with taxing employment as a way of delivering growth 😂

I’m not sure she’s tone deaf. There’s a lot of money coming in and a lot of money going out. The spending is aiding the economy as is the tax on the income. For all you know that poster and her husband might have highly needed jobs. A surgeon perhaps? I don’t want those people run out of the country because labour is obsessed with brain draining the country. I’d rather like it if we could keep some high earning people onshore as I’m not convinced slotting in Shiela with her National Diploma in amateur dance us going to cut it in that role.

It’s nice that you’re amused. Keep laughing as I’d like to keep hearing it when it gets dark and cold.

Oh I'll keep on laughing even if that happens because I'll be able to fuck off abroad...

... It won't happen. Why? Because even if those people move abroad, they choose to live in expensive areas and expect a certain life style. And the cost of living in most of those places they'd consider living is still going to be extortionate.

Otherwise they'd move outside London within the UK, but they either think those places are beneath them or those (very limited number of specialist jobs) only exist in very expensive other cities which have many of the same issues plus often many of the same ones.

Its blackmail and snobbery more than anything though and should be identified as such.

Funnily enough I mentioned this to my accountant last week. He dismissed it immediately saying they would never do it.

I thought as soon as they got in they would come after primary residence after all it’s another thing that people have aspired to have - their own home. It’s not our fault that successive governments have failed to manage property prices. One of the key causes of house price inflation was/is the availability of money encouraging lending. If she does this we will stay put and not down size.

You’ve got them all sussed. Bravo.

While I agree with taxing the wealthy more than us plebs, I do think there are many other things this useless woman can tax - gambling, booze, fags, luxury goods, fancy cars, second homes - all those things we don't actually need. Also extra tax on property bought by foreign nationals who do not otherwise contribute, or claw back the appropriate amount of tax from the likes of Amazon etc. Or, to be honest, just stop throwing money at the wrong things - cancel HS2, stop all the pointless public enquiries years after the event, that do nothing to help anyone. Stop allowing illegal migrants to enter the country (sorry I should say stop making the coastguard escort them safely) to stay in hotels at taxpayers' expense, with free lawyers on tap. Tighten up the welfare system. Get rid of the outdated and pointless House of Lords.

However, you need receipts...... Who will have keep receipts for kitchens, bathrooms, heating, windows from the last 30 years.... I know I haven't.

I largely agree.

It's a trial balloon.

They are testing how much they think they can get away with and floating worse ideas to try and soften when they do raise other taxes so there will be less objections.

Fucking with housing would be a very stupid move.