CGT increasing from 18% to 40% to fund lower paid people
Discussion
JagLover said:
Eric Mc said:
Basicially putting CGT partly back to where it was before 5 April 2008.
AgreedIt seems to me to be a nonsense to tax income at 40/50 % and CGT at 18%.
Index the gain by all means but tax it the same as income.
NoelWatson said:
cs02rm0 said:
Akers said:
TheCarpetCleaner said:
cs02rm0 said:
M400 NBL said:
If this happens and there is no taper relief, a lot of landlords will be tempted to sell up.
I certainly hope so!
Surely a sudden increase in the number of properties on the market would result in a rapid fall in house prices, thereby putting many home owners into negative equity?
Or is your hope purely a selfish one?
Akers said:
TheCarpetCleaner said:
cs02rm0 said:
M400 NBL said:
If this happens and there is no taper relief, a lot of landlords will be tempted to sell up.
I certainly hope so!Surely a sudden increase in the number of properties on the market would result in a rapid fall in house prices, thereby putting many home owners into negative equity?
Or is your hope purely a selfish one?
If prices go up and up and salaries do not then its not good overall. Instead of people who genuinely added value to the economy by buying a property and working on it, the bubble led to Greed with easy credit and wannabe property millionaires. At some point chickens have to come home to roost.
Many people are ALREADY in negative equity and if you use Property Bee, you will see how many are struggling to sell. Its the low interest rates that's making them get by- remember the boom had 110% LTV mortgages!
Labour let it happen as collected stamp duty/mp's slipped properties/tax from estyate agents etc etc but the numbers don't add up. Historically house prices have always been around 3.5 X salary iirc.
cs02rm0 said:
I think there's beginning to be an entire generation that aren't able to climb onto the property market. I see that as a bigger national problem than people maintaining value in homes that they don't live in.
People have been saying that for 40 years but at the end of the day it's a market with limited supply and lots of demand in this country. It's difficult to say prices are "too high". If I was to say house prices are "too low" how would you counter that argument? IMO "working mothers" have simply pushed up the amount families spend on housing. The family has more cash so can afford a more expensive house - house prices rise to match but Mum's no longer at home to look after the kids.
You've got to love the way everyone works their nuts off to buy a house out of taxed income and then the government pockets 40% of the value when you die. (In round numbers)
Ozzie Osmond said:
IMO "working mothers" have simply pushed up the amount families spend on housing. The family has more cash so can afford a more expensive house - house prices rise to match but Mum's no longer at home to look after the kids.
Has there been a step change in working mothers in the last decade?amir_j said:
The Lib Dems Robin Hood policy accepted by the tories...would rather it be used for reducing debt- bizarre.
The 18 per cent rate of tax on gains on non-business assets will be increased to close to the 40 per cent higher rate of income tax, meeting a central plank of Lib Dem policy, according to Tory insiders. There will be “generous exemptions” for profits related to business, in a bid to offset concerns about the potential chilling effect of the tax increase on entrepreneurs.
The revenue from the tax rise will be used to help fund a significant increase in the income tax threshold to help lower-paid people, taking effect in April. The new government, with George Osborne as chancellor, will also agree to subsequent real terms increases in this threshold, as part of a longer term goal of meeting the £17bn Lib Dem policy of raising the income tax exemption to £10,000.
from the Financial Times
I wonder if they'll bring this in at the Emergency Budget or wait until the next fiscal year. From what I remember Lib Dem policy was to reduce the CG allowance to £2k per year also.The 18 per cent rate of tax on gains on non-business assets will be increased to close to the 40 per cent higher rate of income tax, meeting a central plank of Lib Dem policy, according to Tory insiders. There will be “generous exemptions” for profits related to business, in a bid to offset concerns about the potential chilling effect of the tax increase on entrepreneurs.
The revenue from the tax rise will be used to help fund a significant increase in the income tax threshold to help lower-paid people, taking effect in April. The new government, with George Osborne as chancellor, will also agree to subsequent real terms increases in this threshold, as part of a longer term goal of meeting the £17bn Lib Dem policy of raising the income tax exemption to £10,000.
from the Financial Times
Ozzie Osmond said:
cs02rm0 said:
I think there's beginning to be an entire generation that aren't able to climb onto the property market. I see that as a bigger national problem than people maintaining value in homes that they don't live in.
People have been saying that for 40 years but at the end of the day it's a market with limited supply and lots of demand in this country. It's difficult to say prices are "too high". If I was to say house prices are "too low" how would you counter that argument?cs02rm0 said:
I see it is more that people earning double the national average salary can struggle to afford a house, while many properties are owned by few people.
Your closing words hit the nail on the head and set the scene for the next socialist revolution. If the ConLib coalition has any sense it will recognise the risk and do something about it. We really don't need to be a country owned by Russian and Arab billionaires while the Poles and Indians do the work and the chavs do nothing.....cs02rm0 said:
Akers said:
TheCarpetCleaner said:
cs02rm0 said:
M400 NBL said:
If this happens and there is no taper relief, a lot of landlords will be tempted to sell up.
I certainly hope so!Surely a sudden increase in the number of properties on the market would result in a rapid fall in house prices, thereby putting many home owners into negative equity?
Or is your hope purely a selfish one?
1. hike the tax rate
2. abolish /reduce taper and/or index linking original purchase price so the value they tax is greater
3. could lead to a dumping of property as people try to preempt changes (though they could apply it retrospectively) which leads to...the nightmare scenario....
DAILY MAIL/EXPRESS headlines - "House Prices in free fall as market flooded - immigrants buying up cheap houses in your neighbourhood" Nick Clegg is the ANTICHRIST!!!!!
Ozzie Osmond said:
Since CGT has only been as low as 18% for about 10 minutes I can't see any reason to complain about it going back up to 40%.
And it's more likely that capital gains will be combined with income again so the top rate will actually be 50%
This is the only major concern I have and it's not for me personally.And it's more likely that capital gains will be combined with income again so the top rate will actually be 50%
For my MIL who's a pensioner this isn't good news. She and her sister inherited their parents house 10 years ago. Her sister lived in it and it was agree she could stay rent free, so now her sister has decided to sell-up my MIL has to pay GCT - at 40% it wipes out most of her inheritance and her sister doesn't have that impact - her inheritance is intact!
I just hope they do some sort of relief calculation on it so that her gains up to the date of increase are at 18% and after that 40% - but I doubt it!
julian64 said:
Don said:
Eric Mc said:
Basicially putting CGT partly back to where it was before 5 April 2008. But will they be introducing any sort of "aging" formula, such as Indexation or Taper Relief?
The mini-budget in a few week's time will be very interesting.
Will you post up your analysis, please, Eric? When the time comes...The mini-budget in a few week's time will be very interesting.
I always relied on the Observer books myself.
physprof said:
cs02rm0 said:
Akers said:
TheCarpetCleaner said:
cs02rm0 said:
M400 NBL said:
If this happens and there is no taper relief, a lot of landlords will be tempted to sell up.
I certainly hope so!Surely a sudden increase in the number of properties on the market would result in a rapid fall in house prices, thereby putting many home owners into negative equity?
Or is your hope purely a selfish one?
1. hike the tax rate
2. abolish /reduce taper and/or index linking original purchase price so the value they tax is greater
3. could lead to a dumping of property as people try to preempt changes (though they could apply it retrospectively) which leads to...the nightmare scenario....
DAILY MAIL/EXPRESS headlines - "House Prices in free fall as market flooded - immigrants buying up cheap houses in your neighbourhood" Nick Clegg is the ANTICHRIST!!!!!
physprof said:
3. could lead to a dumping of property as people try to preempt changes (though they could apply it retrospectively) which leads to...the nightmare scenario....
...of people being able to afford property. Sounds really bad. {gasp}actually, having lived next to a rented property for a year and a bit, i'd quite like it to become owner-occupied - a lick of paint wouldn't go amiss - so bring on the tax changes. As said before, any simplication of the tax system would be a good thing IMO.
Edited by fido on Wednesday 12th May 23:08
fido said:
physprof said:
3. could lead to a dumping of property as people try to preempt changes (though they could apply it retrospectively) which leads to...the nightmare scenario....
...of people being able to afford property. Sounds really bad. {gasp}actually, having lived next to a rented property for a year and a bit, i'd quite like it to become owner-occupied - a lick of paint wouldn't go amiss - so bring on the tax changes. As said before, any simplication of the tax system would be a good thing IMO.
Edited by fido on Wednesday 12th May 23:08
Fido - I'd agree fully the hyped property bubble was a shambles and mirage... no value created to justify the inflation. It has deprived people getting started (I'm hundreds a month out part funding a home for the twenty something kid (professional person with job) who can't get on the ladder).
Recall seeing a program on a huge new development of flats, awards flowing, architects being interviewed and asked about the design.... they dropped the bombshell ..."oh these flats are designed with a 30 life span"
so, excluding the property w@ankfest programs slapping some paint on a few walls and throwing in some accessorised lifestyle furniture & features, we were building a bubble of shyte housing that would be of diddly squit economic value in 20-30 years.... so Mr&Mrs Newly Wed/ Mr & Mrs Downsizing Couple... you've shelled out 300, 500K for the lovely city appartment... mortgaged to hilt/hoping tp leave an inheritance to the 'kids' ... BTW do you know in 20 years if your still here it will be crumbling around your ears like those inner city ghettos of late 60s-70s.
TheCarpetCleaner said:
NoelWatson said:
cs02rm0 said:
Akers said:
TheCarpetCleaner said:
cs02rm0 said:
M400 NBL said:
If this happens and there is no taper relief, a lot of landlords will be tempted to sell up.
I certainly hope so!Surely a sudden increase in the number of properties on the market would result in a rapid fall in house prices, thereby putting many home owners into negative equity?
Or is your hope purely a selfish one?
Floss69 said:
Ozzie Osmond said:
Since CGT has only been as low as 18% for about 10 minutes I can't see any reason to complain about it going back up to 40%.
And it's more likely that capital gains will be combined with income again so the top rate will actually be 50%
This is the only major concern I have and it's not for me personally.And it's more likely that capital gains will be combined with income again so the top rate will actually be 50%
For my MIL who's a pensioner this isn't good news. She and her sister inherited their parents house 10 years ago. Her sister lived in it and it was agree she could stay rent free, so now her sister has decided to sell-up my MIL has to pay GCT - at 40% it wipes out most of her inheritance and her sister doesn't have that impact - her inheritance is intact!
I just hope they do some sort of relief calculation on it so that her gains up to the date of increase are at 18% and after that 40% - but I doubt it!
Who inherited the house? Your MIL, her sister or both?
If both, how can one sister 'decide to sell' if your MIL doesn't want to?
The 40% is only levies on the amount about the current threshold - the first £325k is free of IHT.
How is the sister's inheritance intact? Surely you don't think the resident sister gets relief because she lives in it?
Northern Munkee said:
Single easiest way to make housing more affordable, and make more homes available to buy, rather than build more, make residential property less an investment opportunity, back to being what they should be.... just a home.
I'm not so sure. Regardless of whether a property is bought by a landlord or the family he would otherwise rent it out to, the number of potential purchasers stays exactly the same. If landlords sell their properties, the rental stock decreases, rents go up meaning more people want to buy a home, thus the demand is the same.The curious thing however about the property market is that all purchasers, whether investors or families, worry about whether prices are going up or going down. This affects what people are prepared to pay (which ultimately means what other lifestyle sacrifices they are prepared to make), and serves to amplify drastically fluctuations in the market.
The other factor commonly touted as a predictor of a crash is the availability of credit. If nobody can get a mortgage (which by the way looks to be easing quite a lot, 90% mortgages are back) then they are renting instead. After a suitable time lag this pushes rental costs up, which brings new investors into the market to replace the FTBs.
The key issue is that someone has to buy the house you are living in. Either it's you, or your landlord. What we can't escape from is the fact that we simply don't have enough supply to meet demand. Household incomes have risen with women now earning more, a greater number of people live alone, there are huge numbers of students. And with the recession homes are being built at an even slower rate than before.
bogwoppit said:
Northern Munkee said:
Single easiest way to make housing more affordable, and make more homes available to buy, rather than build more, make residential property less an investment opportunity, back to being what they should be.... just a home.
I'm not so sure. Regardless of whether a property is bought by a landlord or the family he would otherwise rent it out to, the number of potential purchasers stays exactly the same. If landlords sell their properties, the rental stock decreases, rents go up meaning more people want to buy a home, thus the demand is the same.The policy aim, reflected in the thread title, has a flaw.
Increasing a rate of taxation doesn't by itself and inevitably bring in any extra money. Zero.
With CGT there has to be maintained or increased realisation of assets. Unless there are pressing reasons to dispose of an asset, a higher rate of CGT discourages sale or transfer.
There's an example of Ireland lowering CGT and getting increased tax receipts because more capital gains were realised. The opposite could hold, or at least worst, fewer gains will occur to be taxed and the CGT monies expected won't materialise.
However, while the article also points out that economic trends and volatility "weakens any argument that rates affect the yield predictably, except perhaps in the short term" the lack of any automatic link between increased rate and increased yield remains.
Increasing a rate of taxation doesn't by itself and inevitably bring in any extra money. Zero.
With CGT there has to be maintained or increased realisation of assets. Unless there are pressing reasons to dispose of an asset, a higher rate of CGT discourages sale or transfer.
There's an example of Ireland lowering CGT and getting increased tax receipts because more capital gains were realised. The opposite could hold, or at least worst, fewer gains will occur to be taxed and the CGT monies expected won't materialise.
Study on CGT in Ireland said:
within a reasonable range, the lowering of capital gains tax rates increases government revenues from that tax
http://www.fraserinstitute.org/Commerce.Web/product_files/Capital%20gains%20taxation%20in%20Ireland-8CGTPart3(3).pdfHowever, while the article also points out that economic trends and volatility "weakens any argument that rates affect the yield predictably, except perhaps in the short term" the lack of any automatic link between increased rate and increased yield remains.
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