We've often written here about housing taxation, and said along the way that we'd like to see stamp duty dumped on the basis that it is a huge barrier to labour mobility (the average household moves far less often now than it did before Gordon Brown started raising stamp duty rates).
But, as we know that everything ends up taxed one way or another, we have also said that we would favour a capital-gains charge over primary homes. As long as it was indexed to inflation (and perhaps to house price inflation) we can't really see any problem with it. Particularly at the very high end, where those who bought at the right time in the right place in the south are finding that the tax-free capital gains on their houses add up to more than the heavily taxed lifetime earnings of all the occupants of said houses.
We haven't gained much traction with this thought. So I was interested to see it discussed by Richard Dyson in the Telegraph a few weeks ago.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
He points out that David Cameron's (very bad) idea to offer a special £175,000 ineheritance-tax exemption per person for the "family home" introduces the idea of a "specific but limited tax break applying to people's homes".
That might be something that is a "trigger for policymakers to look at the other property related tax break the vast elephant in the room" that is the 100% capital-gains tax exemption that applies to homes. Why should that not be capped too?
You can read our previous arguments on this here. But as Dyson also notes, it "would fit with some of George Osborne's previous moves." Just look at the way he has slashed, and intends to slash again, pensions tax relief for high earners.
I am not as convinced as Dyson that this will happen politicians fiddle with all housing benefits at their peril but I suspect that given the ongoing boom in London house prices and the fiscal imperative to have a go at raising more money, he is right to think that it is finally under discussion at the Treasury.
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
