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Capital gains tax increase?


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4 minutes ago, Inigo said:

Seems unlikely that they would scrap the exemption for principle private residence, so little effect on most people.

So it doesn't affect me selling my home...

2 minutes ago, Sideysid said:

But boomer buy to letter's will be stuffed?

 

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30 minutes ago, Inigo said:

Seems unlikely that they would scrap the exemption for principle private residence, so little effect on most people.

I don't know..     at this stage anything is possible.

They could go after a "mansion tax"..  say,  10% on property worth over £500k,    and 20% on property over £1m.

 

It seems mostly speculation at the moment:

Quote

 

Treasury officials played down the scope of the review, saying it was a follow up to a review of inheritance tax last year that had yet to be acted on.

The Treasury said: “This is standard internal working. There is no expectation or plans for policy changes as a result.”

However, Sunak said he wanted the Office for Tax Simplification (OTS) to examine the way people who sell second homes, works of art and stocks and shares can escape paying tax on their gains.

 

 

Quote

Scoping documents, also published today, showed the OTS would also look at the position of estates in administration, the selling or winding up of unincorporated businesses and distortions to taxpayers’ investment decisions.

 

It sounds like they are mainly going after the £10.3k  tax free CGT annual allowance..  and possibly second home owners.

Could be a bit of a faff for people who trade a few shares if every trade needs to be documented on a tax return regardless the value.

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46 minutes ago, JackieO said:

So it doesn't affect me selling my home...

But boomer buy to letter's will be stuffed?

 

Yep that's pretty much the scenario in terms of house sales.

All have to 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 part of it for business only
  • 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

The last one is interesting.

 

 

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10 minutes ago, gilf said:

Yep that's pretty much the scenario in terms of house sales.

All have to 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 part of it for business only
  • 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

The last one is interesting.

 

 

 MP's flip second homes for profit I seem to recall. So this would affect them?

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8 minutes ago, gilf said:

Yep that's pretty much the scenario in terms of house sales.

All have to 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 part of it for business only
  • 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

The last one is interesting.

 

 

Is that what being suggested ?proposed ? as that is exactly as i thought CG tax works now regarding main residence 

I thought what he`s allegedly  proposing now is CG paid on any profit from residential property even if it is your main residence 

Quote

It will also look at whether allowances and reliefs, such as the exemption when selling your main home, could be simplified or scrapped.

 

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2 minutes ago, Long time lurking said:

It will also look at whether allowances and reliefs, such as the exemption when selling your main home, could be simplified or scrapped.

You're right.

It's forth paragraph down in the article.  :o

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1 minute ago, JackieO said:

You're right.

It's forth paragraph down in the article.  :o

I doubt very much whether that will happen ,i see it more of a 

Sell your house or buy one now before this comes about ploy to get the housing market moving again 

If it`s not and i dose come about ,it will be interesting to see what effect it has on house prices ,

Then you have to look at what his proposed aim is ,which is said to be "to simplify the tax" well that`s not going to be the case as every house sale would now have a set of accounts with it that will need to be examined/reported 

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8 minutes ago, Long time lurking said:

If it`s not and i dose come about ,it will be interesting to see what effect it has on house prices

That's the main reason they'd be unlikely to do it on residential property..    they want to keep house prices propped up,  not make them affordable  ;)

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9 minutes ago, Libspero said:

That's the main reason they'd be unlikely to do it on residential property..    they want to keep house prices propped up,  not make them affordable  ;)

I think they could do both if the tax was just a flat rate along the same lines as inheritance tax where there are no deductions for the cost of maintenance/improvement  etc  

But can you imagine the response from those who bought a place in London in the 80`s that are selling now xD

Then you have to think about the EA`s response ,tax is 5% increase the price by 8%

Edited by Long time lurking
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33 minutes ago, Long time lurking said:

Is that what being suggested ?proposed ? as that is exactly as i thought CG tax works now regarding main residence 

I thought what he`s allegedly  proposing now is CG paid on any profit from residential property even if it is your main residence 

 

No that is the current rules for JakieO's benefit.

The original is a bit light on details, can't see them introducing it on primary residence, it would totally destroy the housing market. While that might get a good cheer here it would completely fuck the already dysfunctional pyramid scheme that is the housing market in the UK.

Might be do able once we have a crash and equity is removed from the market.

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CGT is a  strange tax -- the average person has no means to normally take advantage of the annual allowance, while rich people would aim to max it each year.  Then, when a single windfall comes along, the poor person is hammered because they've not structured their investments to take advantage.

I'd suggest a couple of ways to even it out.

  1. Lower the 'annual allowance' the same, but allow people to carry it over many years.   The aim might be to structure things so that the income to gov from the tax might be just a bit higher.   I don't know this level, but perhaps it might be a £3k allowance but allowed to be carried over for up to 10 years.  For most people this would mean their occasional windfall would get a £30k CGT free bit, but the rich who get a CG every year would be hammered.
  2. Include primary residence.   This is a 'reasonable exemption' --only it isn't (now) because it has distorted investment behaviour, and so would (IMO) be sensible to adjust it. To get this done you'd have to increase the (carried over multiple years) annual allowance -- but, again, keep it at just a bit more income for the treasury.  So, if the average 'reasonable gain' is £50k on primary residence (as an example), but with 7 years between property sales, then increase the annual allowance by £7k.  For the 'average person' the effect would be the same (no CGT on their £100k gain), but it would be a way to catch amateur property developers (who are effectively working full time on development, but just keep on having it as their primary residence and so don't pay tax on their labour) and the ultra rich who make massive amounts on their primary residence.

I'd suggest that they should do both -- have an annual allowance of about £7k carried over 7 years.  This would allow modest annual gains or a modest primary residence sale to be CGT free, but not both and not more than 'modest'.

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1 hour ago, JackieO said:

You're right.

It's forth paragraph down in the article.  :o

It's the usual government tactic of shock people with a bunch of pre-announced policies, which are bad but there's a really bad one. Then remove the really bad one when you legislate and everyone is relieved and accept all the bad ones without argument.

Edited by The Idiocrat
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1 minute ago, The Idiocrat said:

It's the usual government tactic of shock people with a bunch of pre-announced policies, which are bad but there's a really bad one. Then remove the really bad one when you legislate and everyone is relieved and accept all the bad ones without argument.

It's also a speculative article, so not fact. It's best to bin headlines that start "what if", or "could this".

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9 minutes ago, Austin Allegro said:

If it's part of an ISA wrapper I don't think CGT or income tax is payable on any dividends/profits.

Good point,   I was thinking of normal trading accounts.

I believe you still pay basic tax on dividends within an ISA wrapper.. but,  as you say,  it should be shielded from CGT  (at the moment at least).

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55 minutes ago, Libspero said:

Good point,   I was thinking of normal trading accounts.

I believe you still pay basic tax on dividends within an ISA wrapper.. but,  as you say,  it should be shielded from CGT  (at the moment at least).

I'm not sure, I've got a stocks and shares ISA and don't pay any income tax or CGI on any of it. However that's a managed fund and it might be different for those platforms where one individually buys and sells shares.

At the moment the £20k ISA tax free limit is quite good, although I suspect it's only allowed because most people have cash ISAs and are thus earning bugger all interest anyway.

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58 minutes ago, Libspero said:

Good point,   I was thinking of normal trading accounts.

I believe you still pay basic tax on dividends within an ISA wrapper.. but,  as you say,  it should be shielded from CGT  (at the moment at least).

You don't pay anything; you can't reclaim the notional "tax credit" on the dividend but everybody loses that now including pensions thanks to James Brown alias Gordon.

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36 minutes ago, Frank Hovis said:

You don't pay anything; you can't reclaim the notional "tax credit" on the dividend but everybody loses that now including pensions thanks to James Brown alias Gordon.

Thank you for the clarification.

 I had a feeling that there was some sort of “tax at source” on dividends but I didn’t know what it was call.

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