Tory Tax Threat - party warned over yet more property taxation

A prominent figure in the lettings industry is warning the Tories against ‘stealth increases’ for Capital Gains and Inheritance taxes.

David Alexander is chief executive of the DJ Alexander agency - part of the Lomond Group - and he says: “The Conservatives have always been known as the property-owning party, but they now seem in danger of damaging this reputation as they seek ever more punitive means of balancing the books. 

“Voters have long memories and these moves, if implemented, will impact people over the period of the next general election so Government needs to be aware of the potential consequences of these actions at the ballot box.”

His comments come following the revelation in the Financial Times that allowances on property taxes such as Capital Gains and Inheritance will be frozen at next week’s Autumn Statement.

The paper claims this is to be a central part of the government strategy to fill the hole in the public finances.

In detail this will mean extending a freeze in the inheritance tax “nil rate band” from 2025-26 to 2027-28.

A freeze in the inheritance tax threshold to 2025-26 was announced last year by then chancellor Rishi Sunak.

Double digit inflation has already meant that this freeze has won more than expected for HMRC - extending the freeze further will raise even more.

On death, inheritance tax is paid at 40 per cent on the value of the estate over the nil rate band, which has been set at £325,000 since 2009, and £650,000 for a couple.

In 2017, the government introduced a new “transferable main residence nil rate band of £175,000” which applies when a home is left to direct descendants.

The FT says a similar approach is to be taken for Capital Gains Tax - effectively increasing the tax take by stealth.

“[Chancellor Jeremy] Hunt is likely to extend the current freeze on the CGT annual exempt amount of £12,300 from 2025-25 until 2027-8” says the FT, which also warns that Hunt is increasing capital gains tax paid on shares and second homes.

Alexander responds by saying: “While nobody denies that the Chancellor has tough decisions to make it does seem harsh to single out homeowners for particular, and repeated, punishment. The Conservatives need to be wary of becoming the party that taxes homeownership, that hits savers, and punishes hardworking people for providing a roof over their heads and a home for their families.

“Property investors and second homeowners will also be hit with a further freeze on the CGT allowance on second homes and rental properties. Again, many may feel this is justified but the truth of the matter is that punishing people for investing their wealth in property is not a good look for the Conservatives.”

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