In the wake of that appalling Reaves budget on Halloween this year in which this Fabian functionary of the World Economic Forum raided family farms and heritable private pension funds, we really ought to consider what her next move will be. One thing we can be sure of is that she won’t leave it at that. The NHS needs more money, don’t you know? Therefore, some counter argument needs to be prepared in advance.
Judging by the droppings from left-wing ‘think-tanks’, she is bound to be taking a look at what she and others of her ilk no doubt regard as unearned profits when people sell houses for significantly more than they paid for them. This could take two forms: Either the imposition of Capital Gains Tax (CGT) on house sales; or the scrapping of the Residence Nil Rate Band of Inheritance Tax (IHT) which allows a married or ‘partnered’ couple to pass on to offspring tax free a family home worth up to £1 million. Or maybe even both.
The abolition of the Residence Nil rate Band we can do little about and the only surprise is that she didn’t do that at the same time as she imposed IHT on family farms. There's not much argument against it within a system that accepts IHT as a reasonable and just impost on us all. All we can do is keep reiterating that IHT is an abhorrent tax, it was never meant to be paid by middle class people with relatively modest assets, and the whole idea of it needs to be consigned to the dustbin.
CGT on house sales is another matter entirely.
First of all, let us consider that people who buy a decent-sized family home with four or five bedrooms and perhaps three reception rooms will have paid a significant amount of stamp duty for the privilege of doing so. In my part of the South of England such houses range in price from £750,000 to £1,250,000 or more depending on their location, situation and the size of their gardens. Taking a median, a £1,000,000 house will attract Stamp Duty of £41,250, going up to £43,750 in April next year. That is a whacking one-off tax bill which most people moving to such a home will pay by increasing their mortgages, unless they are a pair of the lucky few who don’t need mortgages. Borrowing to pay a tax? That’s mad, quite mad. But I’ve done it.
Right, I’m the head of a middle-class household whose offspring have flown the nest. My wife and I wish to move to a smaller home and buy a canal boat and a camper van so we can spend less time looking after our property and more time on holiday and enjoying our autumn years. We bought our house 20 years ago for £ XXX,000 and its market value is now approximately double what we paid for it. We recently paid off the mortgage so we own it outright.
This woman Reaves now wishes to tax the ‘profit’ we will realise on a successful sale.
What I will demand of her is this:
First, you will correct the amount we paid for our house to take into account the inflation of the last 20 years.
Second, you will deduct from the notional ‘profit’ all the mortgage interest we have paid over the last 20 years out of taxed income.
Third, you will deduct the £ YY,000 we paid out of taxed income to have the garden paths and patio renewed and the gardens landscaped.
Fourth, you will deduct the £ YY,000 we paid out of taxed income for a new fitted kitchen and utility room complete with domestic appliances.
Fifth, you will deduct the £ YY,000 we paid out of taxed income to have all the windows replaced and new solid wood front and back doors fitted.
Sixth, you will deduct the £ Y,000 we paid out of taxed income to have the soffits, weatherboards and guttering replaced.
Seventh, you will deduct the £ Y,000 we paid to have the roof cleaned and sprayed with an anti-moss treatment.
Eighth, you will deduct the £ Y,000 we paid out of taxed income to have a new LPG boiler installed to beat Miliband’s brainless boiler ban, complete with new pressurised hot water tank because the old one was furred up.
Ninth, I have had the house redecorated externally twice at a cost of £ Y,000 out of taxed income. You will deduct that too.
Tenth, I have completely redecorated this house internally four times and recarpeted or re-floored it. I cannot remember how much we spent on paint, wallpaper and other materials out of taxed income but the sum of £ YY,000 should cover it, including my labour.
I’m sorry we didn’t get around to updating the bathrooms. We decided to have holidays instead.
Once you have totted all that up and deducted it from the notional ‘profit’, you will then deduct the £ YY,000 stamp duty we paid when we bought it. If there is a positive figure left you may tax it, but I suspect that will all add up to much more than the notional ‘profit’ you wish to tax. Since we have looked after and improved a valuable part of the nation’s housing stock which we will now pass on to a younger family, you, in fact, owe us £ XXX,000.
Okay, the last bit’s tongue-in-cheek.
“But the NHS still needs more money”, states Reaves, “who else do I get it from?”
“You’ve got it”, say I. “Take it from the money you’re going to spaff up against the wall in Ukraine, on Net Zero projects, on useless ‘green energy’ projects, on foreign aid for useless green energy projects, on the migrants nobody wants, on the criminal amounts of waste you and we all know occurs in all parts of the public sector. You could even slash the civil service in half and no-one would notice. And get those who are left back into the office for at least nine hours a day, five days a week”.
“Any questions. Ms Reaves?”
Just in case anyone thinks I have mis-spelt Rachel Reaves name, I haven’t. It’s deliberate. To reave is a Middle English verb. Look it up.