property boom and G Brown's eggy face

Yes. Brown is obviously talking down a crash:

cd

"Jim" wrote

(1) CGT is usually not applicable *after* death; (2) *before* death, CGT is not applicable on PPRs; (3) The 263K threshold applies to IHT, not CGT.

What was your question??

silly me

read IHT for CGT

sorry - IHT not CGT.... and not new ...and not exactly "attracting" (if only to avert a pedantfest)

But there must be a deal more money from this especially with the recent and retrospective constraints on trusts...

Does anyone know how much?

Not sure what you're on about. The only benefit to the public purse from property prices seems to be from the usurious rates of stamp duty.

So there is no benefit to the public purse from a barely raised IHT threshold (250 to 263 and hardly in line with property value increases) and the withdrawal of trust options to circumvent this tax?.... heeeeeeelp!!

(stamp duty - absolute peanuts compared to France and probaby the most effective single anti-boom/bust measure available).

IHT is a tax on estates, not on property values per se. The fact that properties have been rising above inflation for some time and are the single biggest reason for more estates being caught in the IHT net than ever before is of course undeniable, and unfortunate for those affected, but nevertheless in the grand scheme of things IHT is not a major contributor to the public purse.

I wouldn't be surprised if the effect of abolishing IHT altogther would have less effect than lowering VAT to 17.4%. And it would make life (not to mention death) so much easier for everyone. Let's get rid of stamp duty while we're at it.

Those were obscure loopholes which should never have existed in the first place. There remain perfectly straightforward options to avoid IHT.

How can you say it's effective? It doesn't seem to have had any effect. Or are you sure prices would have gone up more/faster without it? If so, where's the evidence?

But if you contrast this with the rise over the last few years in the value of estates then it's insignificant. Admittedly, I'm thinking here mostly of the SE where, frankly, we're farting through silk and lighting our Havanas with rolled tenners (my offspring will be more straitened thanks to Gordon) but there are a lot of us in the SE.

of course - but property is far and away the largest component.

It may well not have been but could well be so in the future (and the future was the nub of my interest). If you've got any figures I'd be interested.

If we're talking about a tax where, at least up until recently, the threshold has exceeded the value of most peoples estates then, yes, I'm sure that's about the order of magnitude. With merely token threshold rises though, the picture will have changed considerably over the last 3 years.

fat chance - and a very bad idea.

I'm surprised to hear that - I have a friend who, with his 2 siblings are spitting blood about the withdrawal of a trust set up by their mother and at a non-refundable set-up cost of £7000. And in spite of expensive advice they've found no useful alternatives.

Sadly France has been an unwilling laboratory for any useful controlled experiment so I don't have 'evidence' but as and when GBrown or his 'successor' sees the light and takes a leaf out of the French approach - something tells me he has noticed - I think he knows he will be a double-beneficiary; more tax and less boom/bust. If he does it early enough in the next parliament and gains some economic stability he'll probably be forgiven by the time of the following election.

Property prices in France move more like a gentle swell than a tsunami - the huge transactional costs alone could easily account for this. What are you offering in the way of explanation?

But you're there through choice. You can always move to France :-)

Only recently, and perhaps not for much longer.

When the boom blows over, there will be much gnashing of teeth in the treasury as they will have to forego inflow from a deflating cash-cow.

I'm sure the govt stats sites have plenty.

Why? Er, I mean I agree about the fat chance bit, but why would it be a bad idea?

It not the explanation I'm worried about, it's the justification. AISI, excessive transaction tax just blackens the market. You can see it here with the stamp duty jumping by £5000 for a price increase of just £1. It is just asinine to have such discontinuities. It obviously forces people to pay a proportion of the price as a bribe rather than as legitimate cost.

For those that aren't in the South East with subsidised commuting the prospect of changing job can often mean a move. There is evidence the more mobile a workforce the stronger the economy. As you gather I not convinced by your idea.

No, of course not - I'm pretty sure that 99.999% of us would vote against stamp duty and probably most other taxes - contentious or otherwise. But a government with a given hue will get its taxes by hook or crook and it's a matter of where you put social priorities against personal freedom. More to the point, I'm firmly of the opinion that stamp-duty is a dampener to a speculative market and we certainly need something to control our raging housing-market which is currently the biggest long-term threat of all to our economic well-being. We were in a mess at the end of the last property bust and it will be so again at the next crash even if workers are more mobile in the temporary phase of a market on the rise. We need to be evened out.

In spite of Eurozone's troubles at the moment, I believe (I'm sticking my neck out and maybe the figure I recently spotted is not current) that France is actually more productive per capita than the UK....it's only our individual, and therefore national, greed and very long working hours that give us a higher GDP overall (once again I'm not absolutely sure, I've not googled it, and in any case I believe the difference is marginal). So, I don't see this particular taxation producing a difficulty for France.

as chance would have it, I'm moving there, lock stock and barrel towards the end of this month :-)

I'd be surprised if there wasn't a collapse in the housing market but one never knows. As long ago as 2002, one of the building society bigwigs was talking about our being in a new phase - to coincide with the phase of low interest rates - where the 'historic' past average of house-prices-to-wages (3-ish) would move to a new 5-ish figure. That doesn't seem out of the question to me now - at least for the foreseeable future and until we get to the next cycle (when?) That could provide Gordon with a lot of snouting the IHT trough in the meantime. And just think, all he's got to do is drag his feet on whatever might potentiate new house building in order to stick his nose in for longer.

true, that's probably when they'll be heaving a sigh of relief over increased stamp-duty rates.

I do believe that France's calmer market arises from its swinging transaction costs. We need a steadier property market and I don't see the UK snapping out of this obsession without some form of additional taxation. I would agree that it doesn't have to be stamp-duty but eradicating it without some sort of brake would be hopeless - especially at the moment.

Yes this is quite ridiculous. I guess the ruling class has always lived in houses in the top bandwidth and knows nothing of the frustration of trying to price a house at the tax break-point...civil servants are either dunces or there's too much on the books to sort things out. There is something more approaching a sliding-scale in France where the break--points are very much closer together. When you ask the agent there to quote on the notaire's fee (which is mostly stamp duty collected on behalf of the gov) he pulls out a well-thumbed sheet or two which lists the appropriate rate for a particular price - I think these are price increments of £5000 or thereabouts corresponding to a duty increment of 0.1% (a guess - but that's the ball park and in any case it's not linear) and a final duty range of about 10% (for the cheapest! - the opposite to us in the UK) down to 6% for the most expensive properties. There's far less to agonise over at the transitions and these would always be amounts small enough to easily explain away as fixtures and fittings - a scam that has become something of a raised-eyebrow joke over here.

It's IHT, but you know that. The amounts involved are pretty negligible in the overall scheme of things.

housing-market

My comment was that for most it's a tax on mobility. Taxing job mobility may actually cost the exchequer more in the long run.

More likely that supply and demand are in balance in France. In the UK the problem can be attributed to a sizeable imbalance between demand for housing land and its availability. It's the planning laws that are largely to blame for the continuing rise in the price of land for building, and hence of property.

absolutely not - I assure you. There is admittedly not the absurd and exagerated imbalance here that is created by the stockpiling of BTLers but there is still a problem.

"Terry Harper" wrote in :

Not entirely true. Try Paris and the Rhone-Alpe region for example. Here where I live (Grenoble area) house prices have increased 10-15% in the last year. Not as big as the UK price jumps but big compared to other regions. Also taxation is around 3% for houses under 3 years old. Great if you live in an area with lots of land to build on but here in the mountain regions not so good. Land prices have shot through the roof in the last 2-3 years. 140,000 euros is not untypical for 1000m2, whilst a few years ago it was 20-30,000.

Cheers

Yes, I accept that. Hard to know what causes the most damage in the long run though. As I say, the taxing regime on property in France is far more stringent than here and yet it is still in many ways a successful economy.