Does anyone actually know what the property tax is rumoured to be?

[kirinm]

I’ve read a few bits and pieces and all I’ve gathered so far is they may get rid of stamp duty (a good thing for me personally) but then bring in other taxes which might include a general property tax and / or capital gains?

For buyers, surely the change is a positive one unless I’m missing something?

(Stamp duty on our current purchase is nearly £60k so if we somehow manage to avoid it, that would be brilliant).

120,000 in 1972? I doubt it!!

@rainingsnoring ,

A lower rate is a terrible substitute for indexation.

At the bottom end people pay significant tax on real losses and, at the upper end. People pay 2/3 of the tax that they should (at most) on windfall gains.

We have such an illogical tax system that virtually no one respects it and it gives the genuinely wealthy so many opportunities to play it to their advantage.

And we have the much deeper problem of a society where no one feels a moral obligation to pay tax, as successive governments haven’t done the minimum to create a cohesive and safe society for all.

People who work for a living and earn high salaries already pay a large percentage of tax. Those who are wealthy but not paying IT or not paying much, often have a much lower rate of tax and seem to shout loudest about having to pay any more.

and £120000 in 1972 is actually £2023,444.43 today if you factor in inflation

most "wealthy" people pay income tax.

@user760 ,

The 120,000 in 1972 was me. Why do you doubt it?!

And I’ll take the BOE inflation calculator over your dubious source, thanks.

www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator

I think you've quoted the wrong person.

Of course. All political parties need to play politics. They do far more playing politics than making sensible political strategy, unfortunately. What I'm saying is that continuing with the same policies of the last 40-50 years may now be less popular than you think. The young have given up rather. No wonder so many have mental health problems and are not working. All changes will upset some voters and the old seem to be particularly vocal and better at turning up to vote but politicians would be wise to not just focus on the older age group. If I were running Labour or an actual left leaning party, I would be thinking about that.

I guess it depends what you mean by wealthy. I mean people owning considerable assets. Perhaps you mean high earners, which would not be my interpretation.

I totally agree with you, especially the last paragraph. This is something that I think will lead to a lot of violence and turmoil over coming years. I think that a lot of people have had enough of the degree of inequality.
I also agree that indexation is much better than a lower rate.
Personally, I think we need a huge over haul of the whole tax system. It should be much better designed to incentivise desirable behaviour (eg working more, getting a better paid job or more skills, starting a useful business) and disincentivise undesirable behaviour. I'm sure we can all think of lots of examples of this that get rewarded.

They still pay income tax. Wealthy people - even those who don't work - have large pensions, have passive income, have dividend income and have savings income.

OK, here's a little maths lesson for you.

The current rates of SDLT are given on the gov.uk website here:

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

There is even an official government SDLT calculator there as well (which, spoiler alert, gives the same figures that I do).

The current rates are:

Property value SDLT rate
Up to £125,000 Zero
The next £125,000 (the portion from £125,001 to £250,000) 2%
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

So, if you are buying a house for £450k (assuming that you will not be owning two or more properties) then your stamp duty is:

0% on the first £125k = £0
2% on the next £125k = £2,500
5% on the final £200k = £10,000

Total = £12,500
.

If you are buying a house for £600k then your stamp duty is:

0% on the first £125k = £0
2% on the next £125k = £2,500
5% on the final £350k = £17,500

Total = £20,000

I didn't say that they paid no IT but that they pay a lower overall rate of tax!

@rainingsnoring ,

‘It should be much better designed to incentivise desirable behaviour (eg working more, getting a better paid job or more skills, starting a useful business) and disincentivise undesirable behaviour. I'm sure we can all think of lots of examples of this that get rewarded.’

I agree with all of this, but we also need to actually punish white collar crime,

It is hard to blame ‘benefit scroungers’ after the total scandal of the Covid fast lane, Cameron, Johnson and bankers paying themselves millions of bonuses out of bankrupt banks before the 2008 bailout.

We cannot have one rule for the educated wealthy and another for the less well educated poor.

Actually having checked various sources I think that BoE one is giving a misleading figure..

I said that. Because the average London house price then might’ve been about 10,000. Where were you and was it a huge mansion? £120,000 for a house in 1972 seems an outlier.

@user760 ,

https://www.contractoruk.com/calculators/inflation_calculator

Here is another one in line with the BOE.

You need to use CPI, not RPI. I think that is the mistake you are making.

How patronising.
I understand how SDLT works, thanks and there are plenty of online calculators. I was referring to your calculations of the annual property tax using the figures that you used earlier. I think you said 0.54% of property value on a house which sold for £600,000. Are you assuming that you are only taxed on the amount over £500k? I had assumed a 0.54% of the total 600k, which would be £3240. I very much doubt that they would only tax the amount over 500k because the amount raised would be not worth bothering with at all. Have you seen something to suggest that this might be Labour's plan?

Im not making any mistake since I'm not doing the maths but most of the online calculators including for example the hargreaves lansdown one all give the higher figures. - edit I think the HL one is actually rpi

Absolutely. We have socialism for the massive corporates and super wealthy and capitalism for everyone else. Politics has just become a small stepping stone on the way to becoming stupidly wealthy. None of the men and women at the top of politics have any honour or interest in the population at all. This is one big reason why trust in politicians is at an all time low and people are so angry.

"Are you assuming that you are only taxed on the amount over £500k?"

I am assuming nothing. That is exactly what the report said and was reported by The Guardian on 18th August:

"Sources said Treasury officials were, in part, drawing on the findings of a 48-page report from the centre-right thinktank Onward, which was published in August last year."

In that report it stated on page 17:

"The proposal is to levy the new charge only on properties valued at £500,000 or more, and only on the portion of value above £500,000"

I thought I understood that the objectives of the various proposals being floated is to merge SDLT and council tax into an annual value-related property tax system. It seems sensible to me, as SDLT discourages moving. The figures I read suggested that the council tax substitute element would be banded at 0.45% on value under £500k, and 0.54% between £500 and £1m, with a third tier above that costing 0.8% pa. On our current property, the LVT amount due would be very similar to our council tax.

However, as a pensioner couple planning to relocate and downsize a bit, we have put all such plans on hold until some firm rules have been announced. It's not ideal; we'll never be as young and fit again as we are now but the idea of getting zipped up on both sale and purchase is a risk we're reluctant to invite.

Personally I’d love to see what happened if the conditions by which you can create a trust were drastically narrowed. So much tax is legally avoided by the wealthy hiding their money and assets away in trusts with very dubious justifications.

All parties will be aware of their % votes in all age groups and make their policies accordingly.

Maybe if voting was compulsory things would be different. Although maybe not as we are an aging/anti immigration population.

I see, thanks. You have assumed that the government will follow this particular report's recommendation though. I have no idea what they are going to do, no one does, but this proposal doesn't seem likely to be appealing to the government as their tax take would very likely fall. A cut off is asking for problems and distortions in the housing market and the proposed figures are far too low to make sense. Initiating the tax at the point of sale is also foolish as it reduces transactions, in the same way that SDLT does.
A sensible government, not that we have one, would want to encourage moving as this creates economic activity. They would want to encourage right sizing and discouraging property speculators.