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.
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.