I've come across a new blog. It's not one with which I am in total sympathy but since I could argue with myself, if need be, there's no surprise there. What is good is that:
1. It's a UK tax blog
2. It's well written
3. It's willing to offer contentious opinion.
4. It's based on knowledge, not bigotry (as is too much in this area).
So, I'm adding Taxtrust, the blog of SB Consulting, Chartered Tax Advisers to my list of feeds, straightway. I'd also recommend an article on there for starters. It's published today, and refers to the news story on house price inflation published yesterday:
The NHPAU is a new government agency whose objects are self explanatory. NHPAU reports that the next generation of house buyers will face house prices equivalent to ten times the average income, thereby putting home ownership out of the reach of many and stopping social mobility in its tracks. The 10:1 ratio is being projected for 2026, although, in the greater London area , that ratio would appear to already now be a reality.
I find this frightening. I'm a parent of young children, after all. But Andrew Brooks of SB Consulting is willing to ask the hard questions, such as:
there remains the ever increasing mystery over why no high profile commentators have expressed any concern over the effect of tax law.
As he says:
In particular, the capital gains tax rules for the principal private residence exemption remain absurdly generous
In extremis, there may now be an argument to say that the PPR exemption should be abolished altogether, whether it be in one fell swoop or gradually. The relief was, after all, introduced in an era when the housing market was very different from today and what makes homeownership so special that the proprietor should benefit from a windfall which is tax free anyway ?
With what may well be a well aimed swipe he says:
Other, more skilled, commentators spend their time writing and lobbying for tax justice, and do so admirably and for no personal financial gain. Whilst commenting on international tax abuses and private equity outrages may be sexy, perhaps a few quick wins in duller areas could also be sought, with a review of s. 223(1) being one of them. At the very least, a return to 24 months should be achievable and requires only a Treasury order.
Ow! You hit the target! But you're right. This is a real issue. And I agree that change is needed here, and have said so before, but not on this blog. Caution is needed though. First of all, as Andrew suggests, the absurd overlap rules that allow someone to keep a property for three years after they live in and pay no capital gains tax have to go. A year is always enough now. Second, as was the case when mortgage relief went in the UK, any change has to be gradual to ensure distortion is not too disruptive of the market. But the very fact that a change could be disruptive shows how great the impact of this tax relief is on the UK housing sector. Given that housing now provides one of the greatest sources of inequality in the UK and that is in apart tax driven this has to change.
The Englishman's right to his tax free castle is ensuring many have no chance of having any place to live of their own. That's not just. Some very clear thinking is needed on this, and land value taxation has to be part of any development, I suspect. But count me into the debate.