Hammond’s ‘Giveaway’ Budget was lamentable.
Where was the rhetoric that you would expect this close to Brexit? What about some new ideas as to what is best for Britain? All we saw was Hammond parroting May’s ending of austerity and then beating on the same, boring, old, political drum. Is it hardly surprising that the BBC was not more joyful?
The Government is so anxious not to let Labour jeer at them for being the party for the rich, that they fail to see what is best for us all. Alex Brummer in the Daily Mail said Hammond needs to stand up to these ‘left wing bullies’; not fear them.
In 2014, George Osborne hiked up stamp duty to an ‘eye-watering’ 10% on sales of homes of more than £937,000. It was introduced to steal a march on Labour, who were gaining ground on their mansion tax. It has now proved an expensive and damaging error, and is causing misery. Instead of raising revenue it has now clearly failed.
Stamp duty raises £12.8 billion a year. It has this year fallen a billion short of what was forecast and is set to further decline over the next five years.
When Mrs Thatcher was in office she was not frightened of lowering taxes, or standing up to left-wing bullies. She proved that, ‘when marginal tax rates are too high, revenues will subside’.
Already young ambitious, hopefuls worry about getting a home. They struggle with student loans and have to rely on the bank of Ma and Pa to get started. Homes need to be more affordable, I agree, but high prices are not going to come down as a result of high taxes; their owners simply won’t sell.
And as if this opportunity was lost on Hammond, he then uses the Budget to make matters worse. Last week he fiddled with the capital gains tax exemption on home ownership. Does he not live in the real world? People buy homes to live in, and on occasions they need to sell. If taxes are too high, buyers disappear. So why make the time to sell shorter?
Under the existing rules, if you move out of your home and live somewhere else, you will still qualify for the capital gains tax exemption on all the gain, provided you sell your home within two years of moving out. Under the rules, proposed in Hammond’s Budget, which come into force in April 2020, this exemption period will be reduced to nine months.
Helen and Martin have a young family. They have been trying to sell their expensive apartment in Chelsea into which they moved when they were DINKies, because they need more space for their growing family. Their apartment has already been on the market for over six months and they need to think about their children and schools.
Under the old rules they could move into rented accommodation and would have two years to find a buyer without losing their capital gains tax exemption. Under the new rules they have only nine months to find a buyer, before part of their gain becomes taxable. And the greater the tax to pay, the less Helen and Martin will have to buy a bigger home for their family.
Julie and Matt are at the other side of the spectrum. They own jointly their £3million home in Putney. Their children have grown up and they want to go their separate ways. Julie wants to live with Toby, and Matt and Julie are struggling to be amicable.
Under the old rules, Julie could decide to move out, and they would have two years to find a buyer. But under the new rules, if Julie and Matt cannot sell the house in nine months, Julie will have to pay capital gains tax on part of her gain on her former matrimonial home.
Hammond’s lack of understanding of how tax affects the lives of ordinary people is staggering. If a tax is not working slash it – don’t make it worse by adding unnecessary time constraints.
Brexit is around the corner. We are an island with an extremely good financial services industry and were once the home of choice of the world’s wealthy. We need to use our freedom to raise revenue, not drive it out.
I would have liked a Budget where non-doms are encouraged to bring their billions into Britain, where trusts can come onshore and the top rate of tax for corporates is slashed to 10%. Rather than be embarrassed about being ‘Singapore on Thames’ – let’s be proud of it!
The Government must think how post Brexit we need to make the best of what we have got. A buoyant economy, does not just benefit the rich. All homes need plumbers, architects, electricians, estate agents, and curtain manufacturers. Slashing stamp duty will get the housing market moving again which will benefit many more than just the rich. Hammond needs to stop pandering to the left-wing bullies and get a grip.
If you would like to find out more contact Caroline on 020 3740 7422 or on firstname.lastname@example.org and buy her books, ‘When you are Super Rich Who Can you Trust?’ and ‘How to win business from Private Clients’ from her website www.garnhamfos.com or on Amazon.