I have just had two weeks away in Turkey.
It was great fun but not exactly relaxing.
However, when one has two teenage children and they bring a friend each, I really only have myself to blame.
Nevertheless, it was good to switch off for a bit, although I did receive quite a few messages from friends when the papers were awash with stories about SDLT being reduced and being replaced by a mansion tax or possibly even having Capital Gains Tax (CGT) on primary residences.
Unsurprisingly, this has caused a lot of angst, especially as the reporting invariably focuses on worst case scenarios. And as every news source runs the story and it is then discussed on social media, the echo chamber becomes louder and louder which blows everything out of proportion.
Talk of a land tax, mansion tax and even CGT on primary residences is nothing new. The Conservatives as well as Labour have looked at this in the last 15 years. Indeed, Winston Churchill was a strong supporter of a Land Tax, so this has been discussed for over a century.
It may happen this time, although I suggest that a Land or Mansion Tax or CGT on primary residences is unlikely to happen any time soon for the following reasons:
- Any party that has seriously suggested it has failed to win the next election
- Accurately valuing every property in the U.K. would be a long-winded procedure, so the taxes couldn’t be brought in soon (the government wants to raise funds now).
- The CGT idea wouldn’t bring in a meaningful sum but would be politically risky
As the head of research at Knight Frank, Tom Bill, has pointed out:
“The fundamental issue troubling the government hasn’t changed since it was elected last July.
It has pledged not to raise VAT, income tax or national insurance, which together account for two-thirds of its annual tax take. Stamp duty accounts for just less than 1% and capital gains tax just over 1%.
In summary, a lot of noise has been generated in a short space of time over what are effectively rounding errors for the government.”
There is a lazy argument doing the rounds that Labour think they are going to lose the next election anyway, so they will do it out of spite. However, there is a saying that “a week is a long time in politics” and they have four years left until the next election, so I doubt they have capitulated yet.
While SDLT is very high, the cost of holding a property in the UK is exceptionally low. Council Tax hasn’t been re-banded since 1991. This should change but again would take time to implement.
So, while the papers are full of scare stories and opinion pieces on the subject, they are nothing new.
I’ll go into this in more detail in my next Prime London Property Trends Letter.
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