Now Rachel Reeves plans a 'mansion tax' as Chancellor 'seeks to hit owners of high-value properties' with capital gains raid when they sell up

Daily Mail​

11 hours ago

is eyeing a 'mansion tax' on the owners of high-value properties as she scrambles to plug a £50billion hole in the public finances, it has emerged.
The Chancellor is reportedly drawing up plans to end the current exemption from capital gains tax when some people sell their main home.
This would see those on the higher rate of income tax pay 24 per cent of the value of any 'gain' they make from the increase in the value of their property.
And those on the basic rate of income tax would pay 18 per cent.
According to The Times, Ms Reeves' plans would see the 'private residence relief' from capital gains currently enjoyed by homeowners scrapped for some properties.
The threshold at which the relief would end is currently being discussed within the Treasury, the newspaper added.
It is estimated a threshold of £1.5million would hit around 120,000 homeowners who are higher-rate taxpayers with capital gains tax bills of £199,973.
The Chancellor is said to be considering using her autumn Budget to unveil the capital gains tax raid.
She is estimated by economists to be facing a £50billion black hole ahead of her next fiscal statement, which is widely expected to see Ms Reeves hike taxes once again.
The Chancellor is reportedly drawing up plans to end the current exemption from capital gains tax when some people sell their main home
It has also been claimed that the Chancellor is eyeing a radical shake-up of stamp duty and council tax, as well as a fresh inheritance tax raid.
Property experts warned Ms Reeves' imposition of a 'mansion tax' could merely discourage the owners of expensive properties from selling up.
This would gum up the property market and limit the amount of money the Treasury might raise.
They also expressed concerns that pensioners who have seen property values rocket since buying their homes might be left unable to downsize.
What is private residence relief?
You do not pay capital gains tax when you sell your home if all of the following apply:
you have one home and you've lived in it as your main home for all the time you've owned it
you have not let part of it out - this does not include having a lodger
you have not used a part of your home exclusively for business purposes (using a room as a temporary or occasional office does not count as exclusive business use)
the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
you did not buy it just to make a gain
If all these apply you will automatically get a tax relief called 'private residence relief and will have no tax to pay.
If any of them apply, you may have some tax to pay.
Aneisha Beveridge, head of research at Hamptons, said: 'It's a big change that would hit long-term owners hardest and create a cliff-edge at £1.5million, distorting behaviour around that point.
'While the headline gains look substantial, they're often the result of decades of ownership and, in some cases, house prices haven't even kept pace with inflation.
'For households who don't need to move, this could act as a strong disincentive to sell, dampening transactions and potentially weighing on house price growth and Treasury revenues alike.'
Tom Bill, from Knight Frank, suggested the capital gains tax raid might not raise much money for Ms Reeves.
He said: 'I'd be surprised if there are any gains to tax at the top end of the property market, given that prices in prime central London are down 20 per cent over the last decade.
'If there was anything that reduced demand further, then the prospect of gains in the short-term would pretty much vanish.'
Simon Brown, of property data company Landmark Information Group, said: 'Any tax that rises with property value risks slowing the housing market even further.
'If downsizing becomes less attractive, larger family homes stay off the market and transaction volumes fall.
'This reduces overall movement in the market upwards and downwards, and not only reduces choice for families and first-time buyers, but also hits the Treasury by shrinking the tax base.'
Ms Reeves was already facing a furious backlash over a possible and highly controversial shake-up of property levies.
The Chancellor was warned that proposals to replace stamp duty with an annual charge on homes worth more than £500,000 would damage the market as well as punish people who have worked hard to own their houses.
One of her Treasury ministers refused to rule out the possibility of her introducing the radical change in the Budget.
The Guardian reported that owners of houses worth more than £500,000 could have to pay a 'proportional property tax' based on the value of their properties when they sell up.
However, sources played down the claims that Treasury officials are looking at this proposal or threshold.
Sources also moved away from suggestions that civil servants are drawing on the findings of a report published last year by think-tank Onward, which proposed that only future owners could pay an annual tax based on the value of the property instead of stamp duty.
Under the plan put forward by economist Professor Tim Leunig, current homeowners would not be hit by the charge, but if they do sell up in future their buyers would pay the levy each year instead of stamp duty at the point of purchase.
It is intended to open up the property market by making it less expensive to move and encouraging those in large homes to downsize.
TV presenter Kirstie Allsopp warned the Chancellor not to risk destabilising the market by 'flying kites' about potential new property taxes, telling Times Radio: 'It's not Rachel's to go after because it's their homes.
'It's the roof over their head. And this Government seems to want to punish people for making the sacrifices they've made to buy their own homes.'
The Treasury declined to comment on 'speculation' about future changes to tax policy.
A spokesperson said: 'As set out in the Plan for Change, the best way to strengthen public finances is by growing the economy – which is our focus.
'Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8billion and cut borrowing by £3.4billion
'We are committed to keeping taxes for working people as low as possible, which is why at last autumn's Budget, we protected working people's payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee National Insurance, or VAT.'