Tax grab on us whilst working overseas

True to form, with yesterday's PBR, Brown and Darling have achieved several other sneaky tax grabs.

One I've spotted is the removal of an individual's personal tax allowance when UK citizens are non-resident eg working on contract in another country. See in

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Previously, if you went overseas to work and you chose to let out your house rather than leave it unoccupied, you could offset some of your rent against your personal tax allowance. No longer.

Meanwhile if you are a Buy to Let speculator you can still offset all your rental income against your cost of borrowing. Weird isn't it?

If they stopped the rental income against borrowing costs on BTLs then the over -inflated house market would deflate overnight and ordinary working folk could afford to buy their homes.

Labour just doesnt think it through. They are so preoccupied with fleecing middle England that they miss the plot on the big picture.

Reply to
JimBob
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But they don't want that to happen.

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Reply to
mogga

As a houseowner, I don't want to see a price crash as I want to leave a substantial inheritance to my children. Conversely, a price crash might enable them to get on the property market. It's a Catch-22 situation. Needless to say, I won't be voting for Labour in the next election (as I never have done), although I really don't trust any of the b*****s. The whole political scenario is just a sick joke these days. I am totally disillusioned with the whole mess.

Terry D.

Reply to
Terry D

Yes, but for how long....?

I can sense an oncoming "headline-grabbing initiative closely associated with Tony Blair" (sorry, Gordon Brown)

Erm, no. BTL is only a small proportion of the market. I don't see how anyone could argue it is not a legitimate expense you cannot offset. There is nothing stopping FTBs going into BTL (so to speak).

The reason for high house prices is because we simply did not build enough houses to meet demand. We certainly built a lot more, but nowhere near what is needed.

Reply to
whitely525

For every rental property forced into owner-occupation (by the tax distortion that you appear to advocate), surely there would also be a tenant household simultaneously forced into owner-occupation.

There would be no change in the supply/demand ratio would there? In which case there would be no 'overnight deflation'.

Alternatively, why do prospective owner-occupiers think that they are being 'priced out' by BTL landlords, but that they wouldn't be similarly 'priced out' by the tenants who are currently paying rent to those landlords?

Reply to
Clifford Frisby

No it isn't. Catch 22 runs as follows (quoting Heller who can explain it much better than I can:

There was only one catch and that was Catch-22, which specified that a concern for one's safety in the face of dangers that were real and immediate was the process of a rational mind. Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions and sane if he didn't, but if he was sane he had to fly them. If he flew them he was crazy and didn't have to; but if he didn't want to he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle. "That's some catch, that Catch-22," [Yossarian] observed. "It's the best there is," Doc Daneeka agreed.

Reply to
Hungerdunger

Weird? Not when you see the register of members interests, and notice all the cabinet members making money from BTL.

Turkeys...Xmas..etc

Steve

Reply to
Steve

What nonsensical emotive terms. In every other business, the cost of borrowing (but only the interest and related charges, not of course the cost of the capital itself) is a legitimate expense deductible from income in the calculation of taxable profit. A BTL venture, irrespective of whether it is "speculative" (and any speculative success will fall under the CGT regime), is a business just like any other, and there is no reason whatsoever why its cost of borrowing should be treated any differently. There is nothing weird about it.

Reply to
Ronald Raygun

situation.

That's not "Catch-22", it's simply that house prices have a neutral effect on you, if you're going to leave your house to your kids and the're going to use the money to buy property. Like with me - my house has tripled in value over the last 8 years but I need a house this size, therefore the effect is neutral. Except that the cost of transacting (eg selling your house/your kids buying, or me moving) would be much greater with high property prices, due to stamp duty etc.

There seems to be a warped way of thinking about house prices in the UK - "aren't houses great, they go up in value *and* you can live in them!", when it should be "houses have risen massively in price *but* the cost of providing yourself with somewhere to live has gone up at the same rate".

Reply to
Andy Pandy

I don't really understand residential lettings relief though. I assume the problem it is trying to solve is where someone owns a house and then moves into rented accomodation (or moves out of the country) due to job moves and lets their house in the intervening time but has every intention of moving back.

Assuming that is the case, it would seem fairer to me to be able to nominate an "only or main residence" even if you never live in it.

Not complaining but it does seem perverse that I get an extra 40K CGT allowance for a house that I have no intention of moving back into (circumstances can change but it would have to be a strange event that would have me moving back in rather than selling up)

Tim.

Reply to
google

Yes, I think so too. There is also a problem of moving *not* out of the country, and buying a house there, before selling it and moving back.

Would you think it fair, if you *did* intend to move back into house 1, if you had to lose residence relief on one of the two houses in my above example?

I don't know, but there must beequitability considerations which lead to the equally perverse (at first sight) requirement to give the relief even for properties which wer not occupied as one's PPR prior to renting, but only afterwards.

Reply to
Ronald Raygun

I'm not completely sure what you are saying here.

I would think it fair to be able to claim one year of PPR each year you own a property and to be able to use up those years when you sell.

So if you live in house A for 5 years, then move into rented accomodation for 5 years, then buy house B and live in it for 5 years and then move back into house A for 5 years before selling A and B you'd have 20 years of PPR, house A owned for 20 years and house B owned for 10 years.

When selling up you could either use those 20 years for house A and pay CGT on all the gain of B, or use 10 for A and 10 for B and pay CGT on half the gain of A or some other proportion.

I don't know how the "last three years" bit would work - I'll leave that as an exercise for the interested reader ;-)

I also think that if you're going to have a separate CGT allowance then you ought to be able to "use" it each year against unrealized gains - you can elect to add any unused CGT to the original purchase price of an asset (maybe subject to the limitation that if you then sell at a "loss" you can't carry that loss forwards or use it to offset other gains)

Tim.

Reply to
google

You live in house 1 in town A. You get the chance of promotion at work, but your employer needs you to move to the office in town B. You are due to retire in 7 years, and you want to come back to 1A when you do. Meanwhile, you don't fancy the idea of renting in B, so you buy house 2 there. When you retire, you sell 2B and move back to 1A. Later you sell 1A as well, having owned it for N years.

Under present rules you'd get full PRR on house 2 and partial PRR on house 1 (i.e. (N-7)/N of the gain is relieved) and also LR on 7/N of the gain, capped at 40k.

You'd get exactly the same PRR on house 1, of course, if you had rented instead of bought house 2.

And I suppose if you didn't sell them at the same time, you'd have to decide how many to use for the first, and how many to keep or transfer to the second.

Don't you think it would be fairer to abolish the 36 year rule?

Why only against unrealised gains you have already made? Why not carry forward unused allowance even if you have no appreciating assets?

Reply to
Ronald Raygun

Yes.

Do you mean 36 months or is this something different (that I don't know about)?

And yes, perhaps it would be fairer to abolish this three year rule.

Because that is symmetrical with income tax where you don't get to carry your allowances over to later years.

And it's not really just unrealized gains because not all gains can be quantified until you actually sell - works of art in particular are hard to value. But even property is difficult. So simplest would just be to allow people to assign their CGT allowance to any asset regardless of its actual gain. I suggested not being allowed to offset "virtual" losses as a way of preventing people buying a 50GBP work of art and then using that to carry their CGT forwards until they could use it.

(Although I'm not convinced there should be a separate CGT allowance but instead there should just be just one allowance.)

Tim.

Reply to
google

"Ronald Raygun" wrote

Reply to
Tim

It's what you get when you mean 3 year rule and then partially correct it to 36 month rule.

It's the sort of slip-up which people who, like me, are over 36 years of age are apt to make from time to time.

Reply to
Ronald Raygun

Slightly off topic, but the quality of new building is abysmal. I have personal experience of shoddy building, e.g. mortar bridging wall ties thus transferring damp to the inner wall of my house. This happened to me several years ago and after a complaint to the builder, they had to remove many bricks to clear the ties. I have photographic evidence. The brickwork was also full of mortar above the damp proof course next to electric sockets in my hall, which they had to rectify. Additionally, the party wall in the loft wasn't properly constructed and I could poke a rod into next door's loft.

If I was building a new property, I would be on site daily with my hard hat and orange jacket to ensure that all the work was correct. I did this once when having an house extension built and found that the bricklayer had simply ignored the ties in the cavity wall and bent them back. He was sacked. Fortunately I now have a builder who I can trust.

The soundproofing in modern properties is also abysmal. The builders are using light weight concrete blocks in party walls which are useless at blocking sound transmission. Thank God I was able to move to a detached house 25 years ago.

Terry D.

Reply to
Terry D

perhaps you would like to point out exactly which document it is that says this as I cannot find it.

tim

Reply to
tim.....

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