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Introduce capital gains tax on all homes and raise £421bn, urges think tank

The government is being urged to consider introducing a new capital gains tax on all residential properties in the UK to help raise tens of billions of pounds and avoid relying on future generations to pay off Britain's debts, including the cost of financing the response to the coronavirus crisis. 

A new think-tank report estimates that the Treasury would raise in the region of £421bn over the next 25 years by imposing a new ‘Property Capital Gains Tax’ on all homes sold in the UK. 

With Britain facing an unsustainable national debt and stagnant growth, the report from the Social Market Foundation demands radical change to raise significant extra tax in order to avoid blighting the lives of future generations. 


The tax could be set at 10% of the increase in the value of the property since it was last sold, according to former banker and actuary, Michael Johnson, who compiled the report. 

The Social Market Foundation believes that the fairest place for the Treasury to levy new taxes is “unearned” gains on residential property. 

Taking account of mortgage debt, the equity in UK homes is worth more than £5trn - a figure that has more than doubled in the last 20 years.

Rishi Sunak, the chancellor, last week ordered a Treasury review of capital gains tax, looking at how capital gains are taxed compared to other types of income. The Social Market Foundation said that unearned gains on property are a better target for new taxes than workers’ earned income.

Levying a new tax on the gain in property prices when sold would raise £629bn for the Treasury over 25 years, the Social Market Foundation paper estimates. Some of this should be used to abolish stamp duty and inheritance tax on property, leaving the Treasury with £421bn to repair the public finances. 

The new tax would fall largely on older people, who own most of Britain’s property, and those who inherit property and then sell it.  

Based on ONS data, Johnson calculates that the average pensioner household has net property wealth of £272,900, compared to £53,700 for those aged 25-34. In total, pensioner households own £2,149bn in property equity.

Johnson commented: “The vast £5trn pool of equity in homes presents the Treasury with an opportunity to pay for the economic damage done by the coronavirus, through the introduction of a capital gains tax on the unearned gains in the value of property.

“The alternative is that the young will have to pay for a debt-laden future. They are already hugely disadvantaged, financially, relative to older generations. Asking them to bear the burden of this crisis in the decades ahead would be unfair and unreasonable.”

Johnson argues that without significant action to arrest the growth of the debt, Britain faces “Japanification”, repeating Japan’s modern experience of low growth, deflation, a huge debt-to-GDP burden and low interest rates, all aggravated by an ageing population.

James Kirkup, Director of the Social Market Foundation, said: “These reforms are bold, far-reaching and could be politically controversial: the older voters who own most British property are a powerful group. But the scale of the coronavirus crisis and the unprecedented outlook for the public finances mean that responsible politicians of all parties must be prepared to embrace new ideas and take bold action. 

“Failure to act risks severe economic and social harm. A post-crisis era where the costs of the crisis fall more heavily on the young than the old could strain the social contract between the generations to breaking point.”

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    This as been a trick played for a long time, build yourself a house, claim back the 20% VAT, move the family in, put the house on the market, sell and then do the same thing all over again, tax free, estate agents and conveyancing solicitors won't like it though because the number of houses being bought and sold will dry up.

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    • 24 July 2020 08:36 AM

    How long do we think it would take for the GOVT. to pass such a Bill?

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    "used to abolish stamp duty and inheritance tax on property"

    As long as they abolish these and set it at 10% of the gains (noting any refurbishments, extension costs should he excluded) it sounds like a better deal. Better than Capital Gains at 28%!

    Bill Wood

    I agree. 10% on a gain of, say, £200k (as in my case) is palatable.

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    Nice one from the "think tank". Let's not tax high incomes,(because all such propositions will be FULL BLOWN VOTE LOSERS to all politicans) but do it differently. It is vital to consider different proposals, How about trimming some of expensive salaries, expenses and perks(benefits) for MPs, Lords, and many an executive in the public sector, who are still in a dream world that GB is an Empire in so far just tell the public what they need to do, as we (executive) know what's best for them.
    Yet I fully agree that there is an inherent perverseness in the extortionate rise in house prices! We had one Chancellor increase SDLT for BTL, yet he and predecessors were delighted to see all kinds of foreign money pour into UK from certainly some dubious levy tax

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    Why not make the UK a communist state and take all assets to solve all our problems?


    boris is doing that now--building up the parasitic public sector whilst destroying the private sector

    no public sector employee has been furloughed on reduced salary--MPs got an extra tax free £10000 for staying at home

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    yes work hard save hard invest in your future,only for this evil government to take it all !!!!!!!!!!!!
    they will not get any gains tax from me,as I will never sell !!!!!!!!!!!!!!


    I have properties that I purchases in the 90s that are now worth 10x what I paid for them, why would I sell any of them, just keep taking the income, inheritance tax ? not my problem, I'll be dead, and my children will be getting something for nothing even after they have paid that tax.

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    Crazy idea! It will reduce the number of house moves even more than SDLT does and people will stay put in their starter homes for much longer, thus impacting even more on first time buyers.

    Why not remove the tax free CGT element and increase all CGT to match that already paid on sale of investment properties?

    Currently shareholder speculators are treated much better than landlords who provide homes for those who can't or won't buy their own.

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    No one will ever sell their home again. There will only homes available from bankrupts and dead people.

    Cummings Propaganda Machine in full swing. .

    This is not a Think Tank, this is a Rishi / Cummings propaganda dump to justify right wing state control. Just because the UK voted Brexit they think they can play the same trick every 3 months.
    We are not that gullible. We are not USA, Syria or Russia.


    bull shit--its a left wing agenda--common purpose marxism rolled into one

    real right wingers support private ownership and low taxes and small govt

    ie totally not like boris and his morons

    all think tanks in uk are left wing

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    say i buy a flat for 42000 on 90% mortgage

    i sell 25 years later at 300000--my gain is £252000 less costs eg of repairs etc

    BUT what about the interest? and inflation

    after 15 years cgt is zero in france

    Just Mogler

    France?...I think you have to live in the property...Holiday / second homes----thirty years!

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    quarters of unverifiable origins. It is certain some of the culpability lies with our various shades of govts over the years and the so-called financial sector, which has not been properly regulated, as there have been many who clamoured for deregulation, which every 10, 15, 20 years brings on a variant of Banking(virus) disaster, which govt was ready to vaccinate (bale out at any cost) with QE by the Central Banks, yet never, or nearly never baled out any manufacturing. Have we learnt anything from post WWII performance of the two countries that lost the w/war II? We as the public are also have a serious blame responsibility in not wanting to pay higher taxes but expecting higher rewards, concessions etc. and when a political party comes up with some higher tax proposals which all / most of them are scared to do now as they result in certain defeat at the polls. It is absolutely right, moral, ethical that every generation must leave a fair just and equitable inheritance to our future generations. Many of us are willing to accumulate wealth for ourselves and our families, and their futures, yet think twice about paying higher taxes, which I agree with in one sense as govts. are the the most wasteful spenders (HS2). Final passing note, just one example, where did that Chancellor(GO) who introduced SDLT on private BTLs, accept employment after leaving parliament?? to work for an Oligarch?

  • Mark Wilson

    Tax income higher or capital gains?

    If one has got to give going into a depression isn't a one way bet?

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    • 24 July 2020 09:50 AM

    Does anyone seriously believe any such tax would remain at 10%!!!!!!!!!-???????

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    Goodbye housing market 👋. I won’t be selling anything again if that’s the way they want it.

    • 24 July 2020 11:25 AM

    Indeed far better to remortgage and stick a couple of storeys on the property and take in at least two lodgers.

    I guess potentially you could have two additional storeys and a loft extension.
    So 3 lodgers at say £650 pcm each.
    Every property sort of becomes a townhouse.
    It would mean lots of residential properties being HMO compliant.
    But that shouldn't be a problem.

    Nobody would bother selling.
    They would just rent where they needed to be but return home once a month to see everything is OK with their 6 lodgers at £650pcm each.
    Everyone get a house it will be your forever home and moneymaker.

    I wonder how many OO will declare lodger income in excess of £7500!!!???

    LL though will have lots of solid tenants as most of them will be OO just renting where they need to be and unwilling to sell to get done for a big CGT bill.

    There would be a massive boom for jobbing builders as everyone stuck additional storeys on and took in lodgers.
    Would kill the HMO market with tenants converting to lodgers.

    Just imagine your average 3 bed semi with 2 storeys and a loft extension!!
    Six multiples of £650pcm from lodgers.

    OO could afford to give up work and live off lodgers income from 5 rooms.

    Definitely a great way for asset rich but cash poor OO to sweat their property asset.

    No point in downsizing.
    Upsizing would be the key to more lodger income but in the same property.

    Of course with everyone upsizing all the 3 bed semis become 6 bed properties making the cheaper properties for FTB an extinct property type.

    Silly old Govt they really are quite thick.
    For the oldies they could rent abroad in a nice sunny place and have a live-LL manage the lodgers

    Don't think Govt have fully worked their ideas through!!!!!!
    Of course lenders would love OO remortgaging to add value to their properties.
    Such value will increase far more than the cost of adding 2 storeys and a loft conversion.

    Just Mogler

    Can't comment on Paul Barrett...so WHAT is OO meant to be understood as..Don't be lazy...type the words...even Google doesn't know!!! think you have a finger / keyboard problem!

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    • 24 July 2020 22:20 PM

    I forgot to mention as well that it is possible to have as many residential homes as you want; works for Arab oil sheiks!
    Then an OO could have multiple properties they reside at for 1 day per month or the OO could have another person as a live-in LL.

    Obviously a big problem for residential properties is finding the resources to purchase multiple residential properties.

    BTL mortgages can't be used and it is highly doubtful that without residential mortgages that LL could afford the lodger route.

    But certainly if wishing to attain similar ROI using a lodger strategy means never having to be concerned with S24 or the normal eviction process.

    Of course it would mean only letting to singles on a per room basis though I suppose it would be perfectly acceptable to have a couple paying for a room each.
    They would then sleep together and use their effective paid for but spare room for whatever.

    It would certainly make financial sense to reduce BTL portfolios and convert to fewer residential properties taking in lodgers.

    There is no law that requires a live-in LL to use a bedroom.
    A sofa will suffice.

    It really makes little sense to be a mortgaged BTL LL in light of all the eviction difficulties.

  • Just Mogler

    OO???? Think I need a drink!

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    • 25 July 2020 18:18 PM

    @just mogler

    Yep hands up .......fingers up being lazy!


    Owner Occupier

  • Just Mogler

    Now in my lexicon

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    I never thought I would say this, but following Covid 19 I actually think this is "part of" a good idea! Those who are happy to stay put in a house because they are not prepared to pay 10% of their unearnt profit can do so and never better themselves. Those who need to upsize or downsize will not be bothered about 10% of a profit they have not had to earn as long as SDLT is abolished on purchases which will wipe out £10bn/year of government income, so £250bn over 25 years. So the £421bn gain still becomes a healthy £170bn increase in tax to help pay back the national debt.
    This is a really easy and simplified way of getting rid of SDLT, and collecting a few quid more. Somehow the National debt needs to be paid back, and this seems a fair and reasonable way of doing it because it leaves the choice to the homeowner on whether they really need to move or not.

    • 27 July 2020 20:14 PM

    National debt doesn't need to be paid back immediately.
    As per the Second World War that debt took 80 years to pay off.
    The same debt or this CV19 debt can be paid off over 100 years
    No reason why this generation should suffer.


    Paul, interesting that you mentioned the 2nd world war, my Farther purchased government war stock, when he died in 1979 we sold it for less then he paid for it, when he purchased it he thought he was doing the right and proper thing, what a rip off.

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    • 28 July 2020 01:22 AM


    He did do the right and patriotic thing.
    Unfortunately for him Govts of either persuasion never saw fit to honour what was originally promised.

    I think Osborne did the same with some WW1 stock.

    If we ever have a war bond situation again no way would I buy Govt War Bonds etc.
    And remember this the USA forgave 90% of the debt and still it took so long to repay.
    Say what you like about the Yanks for without them we'd all be speaking compulsory German.
    The American economy saved the West not forgetting they greatly assisted the Soviet Union to stay in the fight and facilitate a 2 front war which Germany couldn't win.
    But consider now where depositors are actually paying Govt to hold their money.
    So desperate are world depositors for a save haven for their monies they are prepared to pay Govt for it.

    Govt is able to finance the National Debt and the deficit very cheaply.

    It doesn't need to give the UK population a hard time.
    They have gone through enough.
    Let future generations pay for CV19.
    We all paid for WW2 since 45 until paid off in about 2010.

    It was worthwhile.
    Same for CV19 .

    An unexpected National Emergency which had/has to be paid for by future generations.
    Simply would not be fair to expect the current UK population to pay for it.
    It has suffered enough.

  • Matthew Payne

    I am not sure why there is this focus with profit derived from property ownership alone being classified as "unearned" income and used in a derogatory context suggesting those making money from property should be thankful as they dont really deserve to keep it. The defintion is 150 years old and was created in context of any money earnt without personal labour by a guy so left wing he would make JC look akin to Maggie, so much so he believed all land and property should be communally owned by society.

    Today unearned income would apply to just about any investment, as very little profit is produced with our hands, so that would apply to investments made in stocks, limted companies, antiques, cars, gold, I wont list them all, but all are made by people strategically with profit in mind, without which our economy would have imploded decades ago. It is not an economically compatible concept in a capitalist democracy such as the UK where one of the foundation stones of our successful economy is the housing market. Defintions aside, tax policy that punishes people retrospectively for their choices and investments perhaps made 20 or 30 years ago will have a catastrophic effect on the housing market which the Chancellor cannot want. There are also significant implications for social care as well, as the older generations that the government want to get downsizing to grease the wheels of the market will simply stay put until the day they die.

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    govt spends too much--stop it

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    • 29 July 2020 14:51 PM

    This unearned income concept.
    I defy any OO not to spend a penny on maintenance for 40 years.

    After 40 years of a property being maintained that property will hopefully have appreciated in value.
    If not a penny is spent on that property for 40 years I doubt the property would even be habitable!!!

    OO work very hard to ensure their properties are well maintained.
    They work very hard to attain the income to pay for these maintenance costs.

    CG is hardly unearned!!

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    Its amazing that so many lefties, mathematically illiterate, always believe that inflating property prices are due to a wealth increase. That is not true, every thing else is inflating as well. The real value of a house is that you can dodge inflation by borrowing ahead thirty years. If a house becomes subject to all manner of taxes for that thirty years then that idea evaporates. By letting property you can at least drop the council tax on the tenant but that is about all. You still have to maintain and manage the property like any other. I can see previous comments, there is absolutely no point I and I agree.

    There is another point to be well aware of. Leasehold will soon become a nightmare. That is so complicated few lefties and very few journalists will ever understand it. The money people will and that will cost our future lease holding children very dear.


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