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…….. “

This won’t work in this context and I cannot see RR going for it. Many who support Labour would not like this at all - as Raising it to 20K would exclude many asset wealthy pensioners (who are sat mortgage free and getting 12K a year pension plus WFA and for many - private pensions) from paying tax and they are the ones mostly using the broken and underfunded services being paid for the by the squeezed middle workers.

Many middle class workers are struggling on 35-80K bracket, huge mortgages and huge student loads with access only to poor services and no UC and or PIP/DLA uplift and they won’t appreciate being taxed more on their income/wages. She has to go for untaxed wealth. No alternative for her really. Having said this one no idea why she backed down on WFA removal.

The huge gold plated pensions are where the money is.

There are lots of people on pensions bigger than the amount their children will ever earn at their career peak.

And - most critically - these are being funded by the state ie today’s tax payers…

Grow the economy.

Encourage manufacturing. Oh wait, our really expensive energy has seen that off. NetZero is going to make it worse.

Encourage businesses to take on staff. Oh wait, our really expensive NI for employers has stopped that.

The problem as I see it is that the Government is in a doom loop (not that it would be any different if there was a Conservative Government in charge).

Public spending is going up with higher welfare and state pension costs combined with calls for greater spending on health, education and defence.

If the Government increases taxes then it will simply slow the economy further (as we saw with the Labour NI increase.

Politically Labour can't cut spending as we saw on the incapacity benefits u turn,

Snd Labour can't increase debt (as Liz Truss found out the hard way) with yields continuing to rise.

So Labour continues in this loop of raising taxes which slows the economy reducing Government tax income. The Government then increases taxes again to make up for this economic slowdown causing another slowdown and so on.

I don’t think this is a great idea if it is going to stop people downsizing, because they will lose such a chunk to tax. I’d rather they just put the income tax up.

This was exactly my plan too.... what's the effing point eh!!

That’s pedantic!

Exactly this.

I guess it’s one way of bringing down the UK’s ridiculously high house prices….

“Only”, in the context of the remaining amount after tax. The tax eats into the equity available for onward purchase. It wasn’t meant in the context of £880k not being very much!

And mine!

But the same would happen to other properties so you'd get a flat lining effect on the market.

Eh? I’m not in London.

A house owner who sells and then buys somewhere else ends up worse off if CGT applies. They don’t have as much available for an onward purchase.

With my example, they have £880k available to put towards a new house, rather than the full £1m. Where does the £120k come from? It either comes from savings, additional borrowing, or buying a cheaper property.

Totally agree with this! Why aren’t they?

I think for 2 reasons. Firstly, some of the things would take more effort. Secondly, taxing things like tobacco, alcohol and gambling would probably not be electorally popular. They’re trying to get more tax from people they know probably won’t vote for them anyway.

What a lot of people don’t realise is that tax changes filter through the whole economy. Take the recent NIC and living wage changes. The government tells us this won’t affect “working people” and that businesses are the ones who will pay. What happens though? Businesses are forced to push their prices up. When restaurants, pubs and supermarkets push their prices up, we all pay.

For now.

Personally, I think that the gov needs to shake up multiple areas in society and to me, it seems like that’s what they’re doing.

There needs to be reform on welfare, council tax, stamp duty, CGT, pensions etc etc. it all needs a good looking at.

I am not against a 1% tax increase - I think that needs to happen alongside shake ups in other areas…

Maybe Rachel Reeves should come on MN and ask for some ideas to save money without destroying the economy?
Here is one way.

https://neweconomics.org/2025/02/the-bank-of-england-is-costing-us-billions

“Instead of an indemnity, the UK could adopt a deferred asset system, as used by the US Federal Reserve and the ECB. This system records losses on the central bank’s balance sheet, to be paid down by future profits. While this is essentially an accounting trick it avoids immediate fiscal strain on taxation and borrowing. As noted by Chris Giles at the FT, “monetary financing would look the same on central banks’ balance sheets” but the deferred asset makes sure this is temporary.
Moving to a deferred asset system could free up to £26bn a year for the Treasury. While these savings would ultimately disappear in the form of forgone profits in future the scale of profits per year has seemingly been much lower than potential losses – helping smooth the cost over time.”

If other central banks are doing it, so should we?

Triple lock needs to go, the welfare bill is unsustainable. There needs to be a time cap on unemployment benefits like in most other countries and people should be self insuring into a mandatory contribution system against periods of unemployment. That is a basic. There are loads of things other countries do successfully and they just need to copy it. The gambling tax is a must as well.

Property taxes need investigation - the whole thing is a mess. But there are issues with passing costs on to tenants as rents are too high already.

I do think those high pensions need looking at… whoever suggested that on this thread. Trouble is, any change is going to cause grumbling… that’s why I think making small changes in multiple areas will limit the impact towards one particular group of people 🤷‍♀️

Some great suggestions 👍

I’m also going to put in a tax against cosmetic surgery/cosmetic alterations. Apparently it’s one of the largest industries in the U.K. and bad surgery costs the NHS a lot of money so I suggest we find a way to tax that industry.

i assume you mean £1.5m, not £1.5bn? I heard it was £1.5m in London and £500k outside of London. £500k sounds like a lot, but there are loads of places outside of London where prices easily hit £500k and above. My house is over £400k, so not quite £500k yet. But I’m far from ‘wealthy’. So I don’t see how they can call this a wealth tax. How much more do they plan to increase taxes by? The so-called black hole in the budget has already grown from £22bn to over £50bn under their watch, and they’ve barely been in power a year. If this what that they manage to do to the country’s finances in the space of a year, where will we be in 4 years time, and how many more times will they have increased our taxes by then? Will any of us have anything to show for all the hard work and sacrifices that so many families up and down the country have made over the years?

It makes me wonder why I even bother to be honest.

Just charge people for remedial work. This is not a real clinical need.