The UK urged to tax £3tn windfall from 20 years of soaring house prices.
Thinktank says capital gains tax should be applied so poorer households are spared from paying more in tax.
The £3tn windfall from soaring house prices in the past 20 years should be subject to a capital gains levy so that poorer households can be spared paying more in tax, a thinktank has urged.
A report from the Resolution Foundation said the government should consider applying capital gains tax (CGT) to increases in the value of main residences in the UK as well as to sales of second homes, instead of increasing tax on income and profits.
The thinktank admitted it would be a hard sell but said house prices had risen by 86% more than inflation in the past two decades and the gains had been “unearned, unequal and untaxed.”
The increase in national insurance contributions and the 2023 rise in corporation tax will mean taxes as a share of the economy returning to levels last seen in the 1950s, yet property windfalls have been entirely absent from the debate, the Resolution Foundation said.
Other capital gains attract tax rates of between 10% and 28%, and the benefits of the property boom had been disproportionately enjoyed by the better off, older people and those living in London, it added.
Households over the age of 60 gained £80,000 in property on average, against less than £20,000 for the under-40s. For the wealthiest 10% of households it was £174,000, while the poorest third it was £1,000. Average gains in London (£76,000) were almost four times those in the north-east (£21,000).
Adam Corlett, the principal economist at the Resolution Foundation, said the £3tn capital gains on main residences represented one-fifth of all wealth in the UK.
“Choosing not to tax this huge housing wealth windfall because of the political and administrative challenges involved has real consequences, including higher taxes for workers and businesses,” he said.
“With the government on course to raise taxes by an equivalent of £3,000 for every household in Britain by the middle of the decade, it’s time to reconsider a range of practical options for taxing these unearned windfall gains if we are to protect workers’ living standards in the years ahead.”
HICH LTD has revolutionised the property survey market since day one! Our property survey service is listed as one of the best in the whole of the UK! Please look at our Trustpilot page and see why everyone chooses us as their property survey provider.
Our vast experience in the local property survey market has made us the number one choice for surveyors. We offer a top-level service at affordable prices, the cost of our surveys is based on the number of rooms in your property, not their value, so our prices are always better than the competition.
At HICH LTD, we are pleased to do our bit to make the world a better place; that’s why we continually partner with NGOs and other institutions to join forces in environmental, social and charitable causes. If you want to know more about our efforts or want to know how you can help, contact us at hichinfo@aol.co.uk.
Are you looking for a roof, structural, or bespoke survey? Request it here!
Follow us on our social networks to keep updated with the most relevant property market news, tips for being a responsible homeowner, and much more!
Twitter: @HICHLTD
Facebook: HICH-LTD
