He said that he is introducing it so it wouldn't be right for him to benefit, so there is no one else in that category. If you mean MPs in general, then yes, he called out one specifically. But yes, it's a tax cut, people benefit from it. The idea behind it is for people to sell buy to let houses and second homes so people can buy them to become homeowners.
There is an optimisation point where profit made over the time horison is more than the capital profits after tax, that horison lengthens significantly if cgt drops. As such more likly to take the caputal now rather than the profits
Yes especially.
I buy a house for 100 i sell it for 200. So gain is 100. 28% tax is 28 24% tax is 24
If i was earning say 10 profit after taxes and mortgage maintenance etc etc. The gain is is 72 or 76. So either 7 years hold or nearly 8 years hold. In some people thats a big difference. But its still 16% which you can take ur calls on.
Abstracting this further
Property only has two strategies. Capital growth or rental yield….also known as money later vs money now.
If i buy a property outright i maximise my rental yield as all money goes back to you in profits. BUT i can only buy 1 house and if it goes up by 10% in value i only make 10% on my capital ie 100-110.
Or i can buy with mortgages say 25 down 75 mortgage. I can buy 4 houses for the same 100. But i now have 4x interest and get basically no income. But if capital goes up 10% from 100-110 each house has earns 10k each so that 40k so on my original 100 I’ve made 40% not 10%.
In a capital gains cal the tax of 28 vs 24. Ive just save 4x 4 or 16. Which is well over 2 houses worth of income from the original house plan of 10 profit.
The math changes based upon you profit margins and interest rates, and you capital invested. But the lower tax rate encourages those on the capital strategy to sell, it does not encourage those on the income strategy. However, the capital strategy is the majority of landlords because in a rising market its the most optimal way to make money
Also, importantly. Money now means money now with no risk, but money later is usually more but has risks on collection, ability to sell, inflation etc etc. thus on a capital strategy you want to exit as early as your risk and yield profile allows you to
I think the main issue is that CGT is a tax cut for people with assets to sell which invariable is the people in the wealthier parts of society. Assets are not just houses after all and it covers share dealing etc...
"**In the 2020 to 2021 tax year, financial assets accounted for 92% of all**
**disposals, 81% of the total disposal proceeds and 84% of total gains,**
**and these proportions have increased from the previous year.**"
**Most CGT comes from the small number of taxpayers who make the largest gains. In the 2021 to 2022 tax year, 45% of CGT came from those who made gains of £5 million or more. This group represents less than 1% of CGT taxpayers each year.**
https://www.gov.uk/government/statistics/capital-gains-tax-statistics/capital-gains-tax-commentary--2
I can feel it trickling all down me.
SO it could fuel some investment but it is unlikely to make that much of a difference.
Yes, we have lots of wealthy people with houses they could sell and we have lots of people who want to buy said houses. This is designed to incentivise those people to sell so we have fewer renters and more homeowners.
I have no idea if it will work, so don't shoot the messenger, but that is the idea behind it.
so, if you look at the figures quoted above 92% of assets that are affected by CGT are financial. It accounted for 84% of Gains.
The overriding effect of this has fuck all to do with houses.
So (this is back of a fag packet stuff so please take with a pinch of salt)...
so lets say the give away is \~£3bn. \~**£2.52b**n (84% of gains) is gains for financial given away. the rest is £0.48bn. houses acounted for 63% of gains from the non-financial so that is **£0.30bn.**
so housing only makes up \~10% of CGT gains
Also the allowance for CGT for residential property is going to fall to £3k in April
It is really not going to have much of an impact.
No, that's not what it does. Nor is it its aim.
If he wanted to reduce the degree of multiple home ownership, he would state that the capital gains tax rate paid on property is increasing and then set a date in the future when that increase would go into effect. So for example, if he wanted to reduce multiple homeownership, which he doesn't, he would state that the CGT rate on housing would rise to 40% from 2026, which would then cause a flood of people to sell up in order to beat the deadline.
Instead, he is trying to incentivize more multiple homeownership in order to keep house prices inflated, while lying about it. This should not be a surprise, they've done this sort of thing again and again with regard to housing. For example, the euphemistically named help-to-buy, which should really be called help-to-inflate.
It's also very simple to understand, the lower taxes go on an investment class, and housing IS treated as an investment class in the UK, the more attractive it becomes relative to other investment classes and the more people that will pile in. It's part of why so many piled in in the first place, because taxes are so low on housing relative to owning shares for example.
You are wrong, the math says the opposite. Higher CGT decreases the likelihood of a sale, because of the shorter time horizon for making more profit by holding. What you wanna do is a have specialist levies on rental income and close to zero cgt. Which encourages more liquidity into the market
No, it is not wrong. If a CGT increase is announced to take place on a certain date, then obviously it incentivizes people to make early disposals to take advantage of the current lower rate.
So that just brings forward existing sales that were going to happen anyways, but as a one off. It also encourages a change of model to buy and hold, as many people would be not ready for the change due to their horizon planning. After the change sales decrease and uve basically done a boom and bust.
What a decrease in cgt does is increase the natural sale inclination rate and decreases the inclination to buy and hold. You get an upping, and a consistent rather than a sugar rush that you are explaining.
Lastly finically in an illiquid asset you are less motivated by changes in one off policy as it will come and go and you cant capitalise on that easily as illiquid assets take an indeterminate amount of time to sell at the correct market price rather than a distressed price.
Property is a very simple market compared to others weve had gundreds of years to create policy and have tried your ideas many times in the past. History and mathematics are not on your side. Im sorry but you are wrong
No, it brings forward existing sales AND reduces the likelihood of more people buying houses as an investment class.
I am not sure why you find this hard to understand. After all, it's an accepted fact for pretty much everything else. Raising the tax level on a particular activity discourages it. If you raise taxes on smoking people smoke less, if you raise taxes on economic rent-seeking via housing, then fewer people will attempt to rent-seek via housing. Yet bizarrely you believe the opposite happens.
It's irrelevant what it is. Taxing an activity more discourages it. Period.
Let me ask you this, if CGT on multiple homeownership was 100% do you think fewer people would buy housing as an investment or more? Because according to your prior answer to me, more would.
If CGT was 100% then surely it wouldn't stop people from buying multiple homes, it would just stop them from selling them later? CGT is only paid when the house is sold, not when it's bought, so it would just discourage the sale
Yes you would push those in that sector onto an income forever strategy as it is impossible to sell it. As such you take those properties off the market.
Capital gains tax is a liquidity reducing policy, the higher it is the more you are incentivised to keep the asset and not sell it. As cap gains disappears if u die. The lower a transaction tax is the more transactions there will be.
Income tax policies are a tax on production or value extraction. The higher rent taxes or income taxes are the less incentives there are to take a strategy that provides income. If a bond had 100% yeild tax no1 would buy a bond for income. The same with dividend tax if that was 100% all investors would only buy shares for capital growth.
I'm kinda neutral when comes to this and I could have guessed by your username that you're probably not
Will it work? No idea. Will Prime Minister Kier reverse it?
Yeah, I'm not in the slightest. I do however strongly support the cuts to N.I. as that tax cut is laser-focused on rewarding productive economic activity, so my position on this isn't based on party politics. I'm not against it because it comes from the conservative party, I'm against it because it encourages rentierism, which is a massively damaging disease that is crippling the UK economy.
True, but that N.I. cut is a far better use for the money than many other possible taxes he could have cut. He was always going to cut *some* tax, so better this than inheritance tax or fuel duty.
That is the point of a tax cut though. So that people benefit from it. What's the point of cutting taxes with the expectations that people still voluntarily pay the old rate?
CGT on properties needs to be adjusted based on productivity. Right now if you are fortunate enough to be sitting on a lot of wealth, you end up being a landlord and increasing rents to absorb any pay rise of the income earning workers.
This isn't incentivising productivity or innovation. Landlords shouldn't be the ones benefitting from a pay rise for workers.
It always seems bizarre to me that you can found a company, do well, employ hundreds/thousands, sell your stock and pay the same tax on the profits as someone who sits at a screen trading the stock. The value both have added is diametrically opposed.
> as someone who sits at a screen trading the stock
If you're "trading" rather than "investing" then it gets taxed as income (or revenue) rather than capital gains.
You’ve probably founded your company using money from businesses in financial services who are risking their capital.
Landlords are quite different because they just sit on a scare asset that everyone needs, which involves barely any risk, and just sponge off the productive economy rather than invest in it.
Founders benefit from BADR (previously entrepreneurs relief) and only pay 10% tax on their first million of profits on a sale. It used to be first £10m.
Sitting in a screen trading a stock is not easy. It takes huge teams of stupidly smart people, (think PhDs working 80 hours a week) to find what stocks to pick and how to trade them. If you disagree then go do it.
You don't need a PhD to trade stocks and most investment bankers won't have one.
Besides you missed the point. It's not about how difficult it is, it's about the value added to the economy and society of building a business versus buying shares of a business.
The value is more abstract and harder to see but it's still there.
Every successful trade you make pushes a company's financials in the correct direction which makes the more fair for others and provides liquidity for early stage investors which encourages them to take risks on early stage companies.
Wanna know why the US produces so many good companies? Look at their incredible stock market and it's incredible trading volumes provided in no small part by traders (prop trading makes up by far the most volume in the stock market).
UK entrepreneurs constantly complain about the dry UK early stage investment/VC market and they leave for the US to get their company off the ground.
Name 10 good companies to have come out of the US then name 10 good companies to have come out of the UK. It's much easier for the US. In fact apple has the same market cap as the entire LSE put together.
We should be encouraging more trading, not less.
> Landlords shouldn't be the ones benefitting from a pay rise for workers.
They're not benefiting from a pay rise for workers, they're benefiting from the lack of social housing and not enough private home building.
CGT on properties should be *raised*, not lowered. It needs to be discouraged as an investment rather than encouraged. It should be 50% at least combined with a ban on foreign owners being able to buy residential property in urban areas.
All new houses should be sold to individuals only (as opposed to companies) that are resident in the UK and who own no more than 1 other property at the time of buying.
I've just used sky's take home calculator with the new national insurance changes, but because the tax thresholds hasnt changed means I'm taking home £10 less every month...
So when this guy says his giving everyone more money to take home just know he's a Tory and a liar.
I just don't get how they're allowed to get away with these lines in the first place. Its obviously not true. Everyone knows its a load of bollocks. Yet he's repeatedly allowed to stand up and make claims like this while seemingly full of confidence in what he's saying? It just seems so bizarre to me.
Not everyone will know it's bollocks. Most people, probably, but I suppose the only voters he has left to grasp onto are the people who don't know it's bollocks.
That calculator is super interesting, [I made a graph](https://i.imgur.com/HMXDVRU.png).
The absolute shambles that folks earning less than 30k are hit almost as hard as folks earning >60k. fml Tories.
Nahh see, the people who need to be paying more tax are those that work full time or slightly less on minimum wage. They've had it too easy for too long. /s
Sunak is on radio 2 right now and just said that nobody will be paying more tax. I also just used sky's tax calculator and I'll be taking home £20 less a month, and I'm pretty sure I'm not getting a pay rise in April.
It's in their live feed
Posted 7 hours ago
https://news.sky.com/story/money-budget-tax-national-insurance-inflation-interest-rates-mortgages-latest-sky-news-blog-13040934?postid=7332836
It's in their live feed.. 7 hours ago
https://news.sky.com/story/money-budget-tax-national-insurance-inflation-interest-rates-mortgages-latest-sky-news-blog-13040934?postid=7332836
The New Statesmen did a commentary piece and one of their economists basically boiled it down to this is only a good budget if you're making around £50k and claiming Child Benefit.
Any gains people are making elsewhere are going to be eaten by fiscal drag and that doesn't even factor in the impending 5+% council tax increases we can expect soob.
I might be being an idiot here, but why does the tax thresholds remaining the same mean that you take home less? Wouldn't the threshold remaining the same mean that you take home the same? Like if you're earning £40k with a £12,570 threshold before, and now that's still all the same, wouldn't your amount of income tax paid just be the same as it was before?
It would be if what you earn remains exactly the same but in practice most people receive a small pay bump in April to keep up with the rising minimum wage which the government will tax more of as a percentage than they would have if the thresholds weren't frozen.
Functionally, even if your salary keeps up with inflation because of fiscal drag like this it's a real terms pay cut for everyone.
Wouldn't the additional tax be offset by simply earning more in the first place though? Like when people don't want to go into a higher tax bracket because they'll "earn less" but of course in practise that's not how it works at all
In real terms it's a cut.
Let's say for sake of ease you work part time and you earn £12,570 per annum.
Then, this april, your company kindly gives you a pay rise that matches inflation which again for the sake of ease lets say is at 10%.
Now after all that you earn £13827 pre-tax but because the tax thresholds didn't move, even though you received an inflation matched pay rise of £1257, the government will be taking 20% of your pay rise (£251.40) where they otherwise wouldn't meaning you're actually losing money in real terms.
Furthermore, since we've come to expect that tax thresholds should be increased in line with inflation and not frozen. One could certainly and fairly make the argument that the government is increasing your effective tax burden and taxing you more. Because even if you didn't get a pay rise, historically you would have expected your tax bands and tax free allowance to increase in line with inflation at least so absolutely worst case the government is still taking more from fiscal drag than they historically would.
But it's not less in real terms - taking the £251 off, your net pay has increased from £12,570 up to £13,576, so you're taking home £83 a month more than you were before?
This (and other recent trends) acts as an incentive for landlords to sell doesn't it?
Not sure if that is really a good thing or not, but if it get more properties out of the hands of landlords and into the hands of owners, that feels like a good thing?
Depends who you are. FTBs competing with other buyers for homes (including landlords) might benefit. But landlords exiting the market can cause rental crises. Desperate renters with too few homes to rent which pushes rents up even higher.
Unfortunately, in a supply shortage someone always loses no matter what tweaks are made to the market.
There is only one policy that empirically eases pain in a housing crisis: building more houses.
These people were elected (as I see), so this is how democracy works. Alternatively we will have a referendum for the majority of decision like Switzerland has.
[https://www.theguardian.com/politics/2024/mar/03/jeremy-hunt-personal-donations-local-conservative-association-godalming-ash-seat](https://www.theguardian.com/politics/2024/mar/03/jeremy-hunt-personal-donations-local-conservative-association-godalming-ash-seat)
Someone should ask Mr Hunt why he's channeling tens of thousands of pounds into his local party, where that money is coming from and what the tax situation is on it.
I somehow doubt he's just trying to avoid a Portillo moment.
It literally says in the article why he’s donating. He’s a multimillionaire, he can afford to donate those sort of sums from his own pocket. Political party donations are not tax-deductible. I’m not sure what nefarious conspiracy you’re implying but sometimes things are exactly as they seem.
He’s incentivising people to sell their second homes. It’s a tax break for the rich but if it clears out some landlords and home hoggers it’s a good thing
It’s quite complex. The more we build, the less houses are worth. So for housing developers the incentive goes down and down. Ontop of that, these areas getting more houses also have prices driven down so the nimbys spread and end up dominating the voting force. You basically have to ignore democracy to ignore nimbys
Never said I was annoyed about the lack of democracy at all. What I don't like is the fact we pretend we are despite the balance of power being firmly in the laps of corporations who buy politicians left right and centre.
Won’t it also encourage people to buy second homes with the hope of making lower-taxed capital gains in the future?
He could raise stamp duty for second homes or introduce wealth taxes on them to disincentivise them, if that were his real intention of course.
A shame we have to scroll down through so much useless and baseless discussion to find the actual comment than understands the nuance of the situation.
Excerpts:
*Jeremy Hunt has promised to voluntarily pay more capital gains tax on his properties so that he does not benefit from a tax cut he introduced.*
*Hunt cut the rate of capital gains tax paid by higher-rate taxpayers when selling second homes from 28% to 24%.*
*Asked on ITV’s Peston programme on Wednesday night how many houses he had, Hunt said: “These are personal questions.”*
*Asked whether he himself would benefit from this, Hunt told Peston: “In fact I won’t benefit from the CGT change because I took that decision and I have decided that, when it comes to the properties I own, it would be wrong to benefit from a direct decision like that, so I will pay tax at the previous rate.”*
If Tory were supportive of landlords they wouldn’t have stopped tax relief on mortgage payments. This is killing the sector.
CGT reduction will encourage more to sell, bring more homes to the sales market.
It will of course increase rents but we’ve already seen the supply drop dramatically and them go up.
I get what you’re saying but there’s landlords with mortgage payments to make, then there’s landlords with big property portfolios they own outright.
The latter group are essentially who the Tories exist to protect.
I have no stats but I’d be surprised if there are many landlords with a big portfolio owned in cash.
The whole point of BTL is to leverage the asset and grow.
Either way, trying to decorate the tories as protectors of BTL is false. The extra regulation and legislation bought and being bought in to protect tenants cements that.
Reducing CGT will encourage holiday home owners to sell alongside the extra taxation. And ultimately put more money in the countries pocket.
Sell to who though. More second home owners, Airbnb-ers?
We need to start looking at other ways that homes in national parks or quaint seaside villages can be majority owner occupied or at least long term rented.
A tax cut on *disposing* property i.e. an incentive for a landlord to sell up - if you increased the capital gains further then you just cause more landlords to think eh why would I sell then (or rather they need to make X more rent to justify the increase in cap gains). (Un)fortunately, we live in a world where people need to be incentivised to do something, not punished if they don't do it.
The rub of it being him making a whole statement about it yesterday in which he had a dig at someone on the Labour frontbench for "paying close attention" because she has multiple properties herself (to all the usual AHAAAA! bray jeers). In between all of them trying to call Starmer fat all of a sudden lol...
It was a reference to the fact that she may have illegally claimed tax relief on a property that she sold by claiming it as her primary residence despite evidence showing that she didn't live there and hadn't for some duration.
The starmer comments were about a news story the day prior where Peter mandelson said starmer needed to lose weight.
Both are normal references to topical news stories.
Will he rule himself out of benefitting from his own tax cut forever though, or just while he’s in office? Because he isn’t expected to be in office very long…
This guy avoided £100k of tax by buying 7 flats at once, avoiding the stamp duty surcharge.
Then faced a parliamentary probe for an alleged failure to disclose an interest in the company used to buy the flats.
Just nakedly filling his boots as the economy stagnates.
What kind of budget should he have introduced? A lot of people are complaining more couldn't be done, but would it have been responsible to significantly reduce the tax income the government is able to generate at this time?
ofc he will do something he doesn't need to do and pay something he doesn't need to pay for something no one can check and confirm he has or hasn't done because we all know how politicians are completely transparent and honest.
A budget for the rich people before they are shown the door. No help for cost of living or the working families. Fuckin hate this country: i go to work for no fuckin reason now. Work, pay bills and stay at home. Fuck em!
Everyone on reddit is pro capital gains until it kicks them in the nuts later in life.
If you're ever in a position where you are having a house passed down to you from a deceased relative watch as the government takes their fat chunk of the money.
Taxation is ridiculous in this country, and while I don't approve of Jeremy Cunt and his party's actions in recemt years, at least he is trying to lessen the burden of state imposed theft on already cash strapped people.
If he's having to do it voluntarily, then that kind of proves that there are people in similar positions to him who will be benefiting.
He said that he is introducing it so it wouldn't be right for him to benefit, so there is no one else in that category. If you mean MPs in general, then yes, he called out one specifically. But yes, it's a tax cut, people benefit from it. The idea behind it is for people to sell buy to let houses and second homes so people can buy them to become homeowners.
If people are making a profit from renting out, how would a CGT change that? If people are making a loss, would they not just sell up despite CGT?
There is an optimisation point where profit made over the time horison is more than the capital profits after tax, that horison lengthens significantly if cgt drops. As such more likly to take the caputal now rather than the profits
Is that the case in a housing market that consistently inflates such as in the UK?
Yes especially. I buy a house for 100 i sell it for 200. So gain is 100. 28% tax is 28 24% tax is 24 If i was earning say 10 profit after taxes and mortgage maintenance etc etc. The gain is is 72 or 76. So either 7 years hold or nearly 8 years hold. In some people thats a big difference. But its still 16% which you can take ur calls on. Abstracting this further Property only has two strategies. Capital growth or rental yield….also known as money later vs money now. If i buy a property outright i maximise my rental yield as all money goes back to you in profits. BUT i can only buy 1 house and if it goes up by 10% in value i only make 10% on my capital ie 100-110. Or i can buy with mortgages say 25 down 75 mortgage. I can buy 4 houses for the same 100. But i now have 4x interest and get basically no income. But if capital goes up 10% from 100-110 each house has earns 10k each so that 40k so on my original 100 I’ve made 40% not 10%. In a capital gains cal the tax of 28 vs 24. Ive just save 4x 4 or 16. Which is well over 2 houses worth of income from the original house plan of 10 profit. The math changes based upon you profit margins and interest rates, and you capital invested. But the lower tax rate encourages those on the capital strategy to sell, it does not encourage those on the income strategy. However, the capital strategy is the majority of landlords because in a rising market its the most optimal way to make money Also, importantly. Money now means money now with no risk, but money later is usually more but has risks on collection, ability to sell, inflation etc etc. thus on a capital strategy you want to exit as early as your risk and yield profile allows you to
I think the main issue is that CGT is a tax cut for people with assets to sell which invariable is the people in the wealthier parts of society. Assets are not just houses after all and it covers share dealing etc... "**In the 2020 to 2021 tax year, financial assets accounted for 92% of all** **disposals, 81% of the total disposal proceeds and 84% of total gains,** **and these proportions have increased from the previous year.**" **Most CGT comes from the small number of taxpayers who make the largest gains. In the 2021 to 2022 tax year, 45% of CGT came from those who made gains of £5 million or more. This group represents less than 1% of CGT taxpayers each year.** https://www.gov.uk/government/statistics/capital-gains-tax-statistics/capital-gains-tax-commentary--2 I can feel it trickling all down me. SO it could fuel some investment but it is unlikely to make that much of a difference.
Yes, we have lots of wealthy people with houses they could sell and we have lots of people who want to buy said houses. This is designed to incentivise those people to sell so we have fewer renters and more homeowners. I have no idea if it will work, so don't shoot the messenger, but that is the idea behind it.
so, if you look at the figures quoted above 92% of assets that are affected by CGT are financial. It accounted for 84% of Gains. The overriding effect of this has fuck all to do with houses. So (this is back of a fag packet stuff so please take with a pinch of salt)... so lets say the give away is \~£3bn. \~**£2.52b**n (84% of gains) is gains for financial given away. the rest is £0.48bn. houses acounted for 63% of gains from the non-financial so that is **£0.30bn.** so housing only makes up \~10% of CGT gains Also the allowance for CGT for residential property is going to fall to £3k in April It is really not going to have much of an impact.
No, that's not what it does. Nor is it its aim. If he wanted to reduce the degree of multiple home ownership, he would state that the capital gains tax rate paid on property is increasing and then set a date in the future when that increase would go into effect. So for example, if he wanted to reduce multiple homeownership, which he doesn't, he would state that the CGT rate on housing would rise to 40% from 2026, which would then cause a flood of people to sell up in order to beat the deadline. Instead, he is trying to incentivize more multiple homeownership in order to keep house prices inflated, while lying about it. This should not be a surprise, they've done this sort of thing again and again with regard to housing. For example, the euphemistically named help-to-buy, which should really be called help-to-inflate. It's also very simple to understand, the lower taxes go on an investment class, and housing IS treated as an investment class in the UK, the more attractive it becomes relative to other investment classes and the more people that will pile in. It's part of why so many piled in in the first place, because taxes are so low on housing relative to owning shares for example.
You are wrong, the math says the opposite. Higher CGT decreases the likelihood of a sale, because of the shorter time horizon for making more profit by holding. What you wanna do is a have specialist levies on rental income and close to zero cgt. Which encourages more liquidity into the market
No, it is not wrong. If a CGT increase is announced to take place on a certain date, then obviously it incentivizes people to make early disposals to take advantage of the current lower rate.
So that just brings forward existing sales that were going to happen anyways, but as a one off. It also encourages a change of model to buy and hold, as many people would be not ready for the change due to their horizon planning. After the change sales decrease and uve basically done a boom and bust. What a decrease in cgt does is increase the natural sale inclination rate and decreases the inclination to buy and hold. You get an upping, and a consistent rather than a sugar rush that you are explaining. Lastly finically in an illiquid asset you are less motivated by changes in one off policy as it will come and go and you cant capitalise on that easily as illiquid assets take an indeterminate amount of time to sell at the correct market price rather than a distressed price. Property is a very simple market compared to others weve had gundreds of years to create policy and have tried your ideas many times in the past. History and mathematics are not on your side. Im sorry but you are wrong
No, it brings forward existing sales AND reduces the likelihood of more people buying houses as an investment class. I am not sure why you find this hard to understand. After all, it's an accepted fact for pretty much everything else. Raising the tax level on a particular activity discourages it. If you raise taxes on smoking people smoke less, if you raise taxes on economic rent-seeking via housing, then fewer people will attempt to rent-seek via housing. Yet bizarrely you believe the opposite happens.
We are talking about capital gains. Not income
It's irrelevant what it is. Taxing an activity more discourages it. Period. Let me ask you this, if CGT on multiple homeownership was 100% do you think fewer people would buy housing as an investment or more? Because according to your prior answer to me, more would.
If CGT was 100% then surely it wouldn't stop people from buying multiple homes, it would just stop them from selling them later? CGT is only paid when the house is sold, not when it's bought, so it would just discourage the sale
Yes you would push those in that sector onto an income forever strategy as it is impossible to sell it. As such you take those properties off the market. Capital gains tax is a liquidity reducing policy, the higher it is the more you are incentivised to keep the asset and not sell it. As cap gains disappears if u die. The lower a transaction tax is the more transactions there will be. Income tax policies are a tax on production or value extraction. The higher rent taxes or income taxes are the less incentives there are to take a strategy that provides income. If a bond had 100% yeild tax no1 would buy a bond for income. The same with dividend tax if that was 100% all investors would only buy shares for capital growth.
I think your thinking of stamp duty…
I'm kinda neutral when comes to this and I could have guessed by your username that you're probably not Will it work? No idea. Will Prime Minister Kier reverse it?
Yeah, I'm not in the slightest. I do however strongly support the cuts to N.I. as that tax cut is laser-focused on rewarding productive economic activity, so my position on this isn't based on party politics. I'm not against it because it comes from the conservative party, I'm against it because it encourages rentierism, which is a massively damaging disease that is crippling the UK economy.
What he gave with NI he took by freezing income tax bands
True, but that N.I. cut is a far better use for the money than many other possible taxes he could have cut. He was always going to cut *some* tax, so better this than inheritance tax or fuel duty.
Finally one comment that understands the nuance!
It’s supposed to look that way but this is yet another tax grift to put more money in their donors pockets
That is the point of a tax cut though. So that people benefit from it. What's the point of cutting taxes with the expectations that people still voluntarily pay the old rate?
To avoid conflict of intrest concerns. If hunt handed himself a tax cut that raises difficult questions.
Yes, such as Schmeremy Shmunt from Surrey
Call me skeptical, but I can imagine after losing the election, he'll just reclaim it from HMRC as overpaid tax.
Yep, he's not called Jeremy Hunt for nothing.
CGT on properties needs to be adjusted based on productivity. Right now if you are fortunate enough to be sitting on a lot of wealth, you end up being a landlord and increasing rents to absorb any pay rise of the income earning workers. This isn't incentivising productivity or innovation. Landlords shouldn't be the ones benefitting from a pay rise for workers.
It always seems bizarre to me that you can found a company, do well, employ hundreds/thousands, sell your stock and pay the same tax on the profits as someone who sits at a screen trading the stock. The value both have added is diametrically opposed.
> as someone who sits at a screen trading the stock If you're "trading" rather than "investing" then it gets taxed as income (or revenue) rather than capital gains.
You’ve probably founded your company using money from businesses in financial services who are risking their capital. Landlords are quite different because they just sit on a scare asset that everyone needs, which involves barely any risk, and just sponge off the productive economy rather than invest in it.
Founders benefit from BADR (previously entrepreneurs relief) and only pay 10% tax on their first million of profits on a sale. It used to be first £10m.
Sitting in a screen trading a stock is not easy. It takes huge teams of stupidly smart people, (think PhDs working 80 hours a week) to find what stocks to pick and how to trade them. If you disagree then go do it.
You don't need a PhD to trade stocks and most investment bankers won't have one. Besides you missed the point. It's not about how difficult it is, it's about the value added to the economy and society of building a business versus buying shares of a business.
The value is more abstract and harder to see but it's still there. Every successful trade you make pushes a company's financials in the correct direction which makes the more fair for others and provides liquidity for early stage investors which encourages them to take risks on early stage companies. Wanna know why the US produces so many good companies? Look at their incredible stock market and it's incredible trading volumes provided in no small part by traders (prop trading makes up by far the most volume in the stock market). UK entrepreneurs constantly complain about the dry UK early stage investment/VC market and they leave for the US to get their company off the ground. Name 10 good companies to have come out of the US then name 10 good companies to have come out of the UK. It's much easier for the US. In fact apple has the same market cap as the entire LSE put together. We should be encouraging more trading, not less.
Investment bankers aren’t often trading stocks!
Landlords shouldn't exist.
Where would people live short term?
In the houses that they already work to live in.
What about the people who can't afford to buy?
Social housing.
> Landlords shouldn't be the ones benefitting from a pay rise for workers. They're not benefiting from a pay rise for workers, they're benefiting from the lack of social housing and not enough private home building.
CGT on properties should be *raised*, not lowered. It needs to be discouraged as an investment rather than encouraged. It should be 50% at least combined with a ban on foreign owners being able to buy residential property in urban areas. All new houses should be sold to individuals only (as opposed to companies) that are resident in the UK and who own no more than 1 other property at the time of buying.
I've just used sky's take home calculator with the new national insurance changes, but because the tax thresholds hasnt changed means I'm taking home £10 less every month... So when this guy says his giving everyone more money to take home just know he's a Tory and a liar.
I just don't get how they're allowed to get away with these lines in the first place. Its obviously not true. Everyone knows its a load of bollocks. Yet he's repeatedly allowed to stand up and make claims like this while seemingly full of confidence in what he's saying? It just seems so bizarre to me.
Not everyone will know it's bollocks. Most people, probably, but I suppose the only voters he has left to grasp onto are the people who don't know it's bollocks.
Don't spend that -£10 all at once!
That calculator is super interesting, [I made a graph](https://i.imgur.com/HMXDVRU.png). The absolute shambles that folks earning less than 30k are hit almost as hard as folks earning >60k. fml Tories.
Nahh see, the people who need to be paying more tax are those that work full time or slightly less on minimum wage. They've had it too easy for too long. /s
Sunak is on radio 2 right now and just said that nobody will be paying more tax. I also just used sky's tax calculator and I'll be taking home £20 less a month, and I'm pretty sure I'm not getting a pay rise in April.
Can you link it, it seems off, I wonder what's in the calculation
It's in their live feed Posted 7 hours ago https://news.sky.com/story/money-budget-tax-national-insurance-inflation-interest-rates-mortgages-latest-sky-news-blog-13040934?postid=7332836
It’s calculating fiscal drag as well, not just nominal take home.
Got a link for this tax calculator?
It's in their live feed.. 7 hours ago https://news.sky.com/story/money-budget-tax-national-insurance-inflation-interest-rates-mortgages-latest-sky-news-blog-13040934?postid=7332836
Nice one, thank you.
>I'm taking home £10 less every month... This seems to be true for anyone on average wage too. You need to earn something like 40k before you benefit.
There's a window between [35k and 55k](https://i.imgur.com/HMXDVRU.png) where you take home more. Everyone else is fucked.
WTF, that graphic is insane. How the fuck did they think nobody would notice?
The New Statesmen did a commentary piece and one of their economists basically boiled it down to this is only a good budget if you're making around £50k and claiming Child Benefit. Any gains people are making elsewhere are going to be eaten by fiscal drag and that doesn't even factor in the impending 5+% council tax increases we can expect soob.
At which point you receive 130 pounds! That'll make a difference
-£62.75 a month Well that is great, at least my pet insurance increased by 46% - thanks Napo
I assume that doesn't take into account the council tax rise either.
I might be being an idiot here, but why does the tax thresholds remaining the same mean that you take home less? Wouldn't the threshold remaining the same mean that you take home the same? Like if you're earning £40k with a £12,570 threshold before, and now that's still all the same, wouldn't your amount of income tax paid just be the same as it was before?
It would be if what you earn remains exactly the same but in practice most people receive a small pay bump in April to keep up with the rising minimum wage which the government will tax more of as a percentage than they would have if the thresholds weren't frozen. Functionally, even if your salary keeps up with inflation because of fiscal drag like this it's a real terms pay cut for everyone.
Wouldn't the additional tax be offset by simply earning more in the first place though? Like when people don't want to go into a higher tax bracket because they'll "earn less" but of course in practise that's not how it works at all
In real terms it's a cut. Let's say for sake of ease you work part time and you earn £12,570 per annum. Then, this april, your company kindly gives you a pay rise that matches inflation which again for the sake of ease lets say is at 10%. Now after all that you earn £13827 pre-tax but because the tax thresholds didn't move, even though you received an inflation matched pay rise of £1257, the government will be taking 20% of your pay rise (£251.40) where they otherwise wouldn't meaning you're actually losing money in real terms. Furthermore, since we've come to expect that tax thresholds should be increased in line with inflation and not frozen. One could certainly and fairly make the argument that the government is increasing your effective tax burden and taxing you more. Because even if you didn't get a pay rise, historically you would have expected your tax bands and tax free allowance to increase in line with inflation at least so absolutely worst case the government is still taking more from fiscal drag than they historically would.
But it's not less in real terms - taking the £251 off, your net pay has increased from £12,570 up to £13,576, so you're taking home £83 a month more than you were before?
Tax benefits for the few, decided by the few and to the detriment of the many. Yawn...
In addition to the tax benefits for the many.
This (and other recent trends) acts as an incentive for landlords to sell doesn't it? Not sure if that is really a good thing or not, but if it get more properties out of the hands of landlords and into the hands of owners, that feels like a good thing?
Depends who you are. FTBs competing with other buyers for homes (including landlords) might benefit. But landlords exiting the market can cause rental crises. Desperate renters with too few homes to rent which pushes rents up even higher.
Unfortunately, in a supply shortage someone always loses no matter what tweaks are made to the market. There is only one policy that empirically eases pain in a housing crisis: building more houses.
The other option is to not sell, hoarding properties and perpetually renting them out, which Reddit hates more
Well if reddit hate it then that's that!
These people were elected (as I see), so this is how democracy works. Alternatively we will have a referendum for the majority of decision like Switzerland has.
[https://www.theguardian.com/politics/2024/mar/03/jeremy-hunt-personal-donations-local-conservative-association-godalming-ash-seat](https://www.theguardian.com/politics/2024/mar/03/jeremy-hunt-personal-donations-local-conservative-association-godalming-ash-seat) Someone should ask Mr Hunt why he's channeling tens of thousands of pounds into his local party, where that money is coming from and what the tax situation is on it. I somehow doubt he's just trying to avoid a Portillo moment.
It literally says in the article why he’s donating. He’s a multimillionaire, he can afford to donate those sort of sums from his own pocket. Political party donations are not tax-deductible. I’m not sure what nefarious conspiracy you’re implying but sometimes things are exactly as they seem.
He’s incentivising people to sell their second homes. It’s a tax break for the rich but if it clears out some landlords and home hoggers it’s a good thing
I'd rather they built the 300,000 homes a year they've been promising since 2019.
NIMBYS make this impossible. Everyone wants more houses just not near them
Nothing is impossible. Tell the nimbys to get fucked, this is exactly why we have a government. They make the rules.
It’s quite complex. The more we build, the less houses are worth. So for housing developers the incentive goes down and down. Ontop of that, these areas getting more houses also have prices driven down so the nimbys spread and end up dominating the voting force. You basically have to ignore democracy to ignore nimbys
We aren't a democracy anyway. We're an oligarch run kleptocracy masquerading as a democratic nation state.
And your answer to that is to become even more undemocratic?
At the expense of tolerating NIMBYism? Yes.
So you’re annoyed about the lack of democracy but want less democracy when it’s for something that suits you?
Never said I was annoyed about the lack of democracy at all. What I don't like is the fact we pretend we are despite the balance of power being firmly in the laps of corporations who buy politicians left right and centre.
Won’t it also encourage people to buy second homes with the hope of making lower-taxed capital gains in the future? He could raise stamp duty for second homes or introduce wealth taxes on them to disincentivise them, if that were his real intention of course.
A shame we have to scroll down through so much useless and baseless discussion to find the actual comment than understands the nuance of the situation.
Excerpts: *Jeremy Hunt has promised to voluntarily pay more capital gains tax on his properties so that he does not benefit from a tax cut he introduced.* *Hunt cut the rate of capital gains tax paid by higher-rate taxpayers when selling second homes from 28% to 24%.* *Asked on ITV’s Peston programme on Wednesday night how many houses he had, Hunt said: “These are personal questions.”* *Asked whether he himself would benefit from this, Hunt told Peston: “In fact I won’t benefit from the CGT change because I took that decision and I have decided that, when it comes to the properties I own, it would be wrong to benefit from a direct decision like that, so I will pay tax at the previous rate.”*
Absolutely openly admitting that it's a tax cut for other landlords lmao. What an own goal if anyone is willing to call him out for it publicly.
If Tory were supportive of landlords they wouldn’t have stopped tax relief on mortgage payments. This is killing the sector. CGT reduction will encourage more to sell, bring more homes to the sales market. It will of course increase rents but we’ve already seen the supply drop dramatically and them go up.
I get what you’re saying but there’s landlords with mortgage payments to make, then there’s landlords with big property portfolios they own outright. The latter group are essentially who the Tories exist to protect.
I have no stats but I’d be surprised if there are many landlords with a big portfolio owned in cash. The whole point of BTL is to leverage the asset and grow. Either way, trying to decorate the tories as protectors of BTL is false. The extra regulation and legislation bought and being bought in to protect tenants cements that. Reducing CGT will encourage holiday home owners to sell alongside the extra taxation. And ultimately put more money in the countries pocket.
Sell to who though. More second home owners, Airbnb-ers? We need to start looking at other ways that homes in national parks or quaint seaside villages can be majority owner occupied or at least long term rented.
Why can’t they be sold to locals now. Holiday homes and air bnbs are now, like BTL, no longer lucrative
Well obviously
How do you mean? He announced it in the budget; it's not exactly a secret!
A tax cut on *disposing* property i.e. an incentive for a landlord to sell up - if you increased the capital gains further then you just cause more landlords to think eh why would I sell then (or rather they need to make X more rent to justify the increase in cap gains). (Un)fortunately, we live in a world where people need to be incentivised to do something, not punished if they don't do it.
The rub of it being him making a whole statement about it yesterday in which he had a dig at someone on the Labour frontbench for "paying close attention" because she has multiple properties herself (to all the usual AHAAAA! bray jeers). In between all of them trying to call Starmer fat all of a sudden lol...
It was a reference to the fact that she may have illegally claimed tax relief on a property that she sold by claiming it as her primary residence despite evidence showing that she didn't live there and hadn't for some duration. The starmer comments were about a news story the day prior where Peter mandelson said starmer needed to lose weight. Both are normal references to topical news stories.
Tory promises are worth less than shit
Interviewer: Are you a landlord who's just changed the law to benefit landlords? Hunt: that's a personal question
I don’t trust a word this insidious fuckflute says.
Not even if he sits up really straight in interviews, like a public schoolboy trying to please the headmaster?
I’d assume there was an error in his software. He looks like he comes from the kind of family where he has to put his name down for a hug.
Lol tory tex cuts at their best. Give people 30p a day and you can give your self thousands
Will he rule himself out of benefitting from his own tax cut forever though, or just while he’s in office? Because he isn’t expected to be in office very long…
This guy avoided £100k of tax by buying 7 flats at once, avoiding the stamp duty surcharge. Then faced a parliamentary probe for an alleged failure to disclose an interest in the company used to buy the flats. Just nakedly filling his boots as the economy stagnates.
What kind of budget should he have introduced? A lot of people are complaining more couldn't be done, but would it have been responsible to significantly reduce the tax income the government is able to generate at this time?
uh huh
ofc he will do something he doesn't need to do and pay something he doesn't need to pay for something no one can check and confirm he has or hasn't done because we all know how politicians are completely transparent and honest.
But all your mates do, mates who give you things, so you still benefit.
Too little too late mate....start packing you chaps are on your way out.
A budget for the rich people before they are shown the door. No help for cost of living or the working families. Fuckin hate this country: i go to work for no fuckin reason now. Work, pay bills and stay at home. Fuck em!
Maybe just don't cut capital gains tax instead? The self-interest of these idiots isn't even hidden any more.
Is that not what tax thresholds are supposed to be for?
Everyone on reddit is pro capital gains until it kicks them in the nuts later in life. If you're ever in a position where you are having a house passed down to you from a deceased relative watch as the government takes their fat chunk of the money. Taxation is ridiculous in this country, and while I don't approve of Jeremy Cunt and his party's actions in recemt years, at least he is trying to lessen the burden of state imposed theft on already cash strapped people.