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Three Questions About The New 40% Cgt Rule

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Cameron makes a distinction between nonproductive investments that will attract 40% CGT and prodoductive investment that should be encouraged and will be able to escape the new measure. But does this mean that BTLers who have set up limited companies to manage their portfolios will be able to ascape the tax because they are "businesses", so-called? If so then Cameron is not really targetting nonproductive asset price speculation so much as simply knocking out the small players in favour of the bigger ones.

What will be the biggest downward pressure from the change to 40% CGT? Will it come from second home owners flooding the market before the change comes in, or will it be from the disincentive for flippers and "investors" to continue to compete with first time buyers?

Thirdly no matter how the specifics pan out, isn't this a major opportunity for HPCers to promote our agenda for a change? For years government intervention and media spin has been against us, but haven't we been handed some powerful amunition here? There is no doubt there was a concerted effort over the past ten years on the part of those who had an interest in talking up house prices. But the tables have turned. We should be doing all we can to spread panic among second home owners and BTLers over the new CGT rules. If we all hit forums, comments pages on articles, blogs, phone ins and so on could we make a difference? Just a comment here and there, "I was going to use my second home as a pension but I've decided to sell it before the tax hike kills my profits" and so on.

There was a post about Foucault on this board a few years ago, and the application of his discourse analysis to the way the housing market is constructed. We have a real and rare opportunity to shape the discourse to our advantage. Language is power.

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Cameron makes a distinction between nonproductive investments that will attract 40% CGT and prodoductive investment that should be encouraged and will be able to escape the new measure. But does this mean that BTLers who have set up limited companies to manage their portfolios will be able to ascape the tax because they are "businesses", so-called? If so then Cameron is not really targetting nonproductive asset price speculation so much as simply knocking out the small players in favour of the bigger ones.

What will be the biggest downward pressure from the change to 40% CGT? Will it come from second home owners flooding the market before the change comes in, or will it be from the disincentive for flippers and "investors" to continue to compete with first time buyers?

Thirdly no matter how the specifics pan out, isn't this a major opportunity for HPCers to promote our agenda for a change? For years government intervention and media spin has been against us, but haven't we been handed some powerful amunition here? There is no doubt there was a concerted effort over the past ten years on the part of those who had an interest in talking up house prices. But the tables have turned. We should be doing all we can to spread panic among second home owners and BTLers over the new CGT rules. If we all hit forums, comments pages on articles, blogs, phone ins and so on could we make a difference? Just a comment here and there, "I was going to use my second home as a pension but I've decided to sell it before the tax hike kills my profits" and so on.

There was a post about Foucault on this board a few years ago, and the application of his discourse analysis to the way the housing market is constructed. We have a real and rare opportunity to shape the discourse to our advantage. Language is power.

Should not make any difference if a company or individual it is the use of the asset that will amtter even if wrapped into company shares.

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But does a property company renting out houses count a capital gain on a house as a "business asset" gain or not?

Given renting is their business, houses should be their business assets no?

Capital taxes are not the greatest of things anyway (don't we want people to invest?), if we want to get rid of speculation, why not just have a CGT that starts at 50% and then goes down by 5% each year for example.

So if you hold the asset for more than 10 years then there is no CGT.

Then abolish the tax free CGT allowance, that would screw over the speculators. :lol:

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But does a property company renting out houses count a capital gain on a house as a "business asset" gain or not?

Given renting is their business, houses should be their business assets no?

Capital taxes are not the greatest of things anyway (don't we want people to invest?), if we want to get rid of speculation, why not just have a CGT that starts at 50% and then goes down by 5% each year for example.

So if you hold the asset for more than 10 years then there is no CGT.

Then abolish the tax free CGT allowance, that would screw over the speculators. :lol:

The possibility of shares in a property holding company qualifying for the lower rate of CGT is precisely zero.

"Business" is a slightly misleading term here. The word which will be used in the tax legislation is "trade." Renting out property is not a trade.

If you own assets which are not trading assets (eg property for a rental business) then those assets will not qualify for the lower CGT rates and nor will shares in a company which holds them. Sticking non-trading assets into a company will make absolutely b*gger all difference.

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I've got another question about the proposed CGT rules

The stuff I've read says that the 40% rate will only apply to those paying the higher rate of income tax

Does this mean that if someone is paying 20% income tax, but makes a £100K capital gain on a second home, they will still only pay the lower rate of GGT?

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I've got another question about the proposed CGT rules

The stuff I've read says that the 40% rate will only apply to those paying the higher rate of income tax

Does this mean that if someone is paying 20% income tax, but makes a £100K capital gain on a second home, they will still only pay the lower rate of GGT?

No. The total of their income and capital gains for the tax year will take them into the 40% band (but not quite into the 50% band).

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No. The total of their income and capital gains for the tax year will take them into the 40% band (but not quite into the 50% band).

So how about someone who earns zero but has a capital gain of £40k? Would they pay CGT at 20%?

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So how about someone who earns zero but has a capital gain of £40k? Would they pay CGT at 20%?

Yes, because a gain of 40k isn't enough to get them into the 40% band (taking into account the CGT annual exemption).

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Yes, because a gain of 40k isn't enough to get them into the 40% band (taking into account the CGT annual exemption).

Thanks. Based on this, it should be possible for anyone paying themselves through a ltd company to take a small wage from the company that year but take a large profit from asset disposal and only pay tax at the lower rate.

Edited by Sine270

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What will be the biggest downward pressure from the change to 40% CGT? Will it come from second home owners flooding the market before the change comes in, or will it be from the disincentive for flippers and "investors" to continue to compete with first time buyers?

I suspect that'll be a damp squib. The tax will make *** all difference to house prices. Property tycoons may squeal, but 60% of free money is still a lot more than 0% of free money.

There was a post about Foucault on this board a few years ago, and the application of his discourse analysis to the way the housing market is constructed. We have a real and rare opportunity to shape the discourse to our advantage. Language is power.

Go for it. The public discussion has moved our way in recent years, and no doubt has further to go.

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Capital taxes are not the greatest of things anyway (don't we want people to invest?), if we want to get rid of speculation, why not just have a CGT that starts at 50% and then goes down by 5% each year for example.

So if you hold the asset for more than 10 years then there is no CGT.

Yes, we want people to invest. We also want people to work, so we'd better stop taxing earned income, too. And we want people to shop, so let's abolish VAT while we're at it. And we want companies to employ people, so there goes employment tax ...

Actually I'd support a scheme something like yours for shares - investment in the productive economy. And for property too, provided we also recognise the appropriation of a limited resource in a land value tax, which could replace both council tax and business rates. But better something like stamp duty (without the silly thresholds) than capital gains tax for that.

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Thanks. Based on this, it should be possible for anyone paying themselves through a ltd company to take a small wage from the company but take a large profit from asset disposal and only pay tax at the lower rate.

This doesn't make sense. :) Usually, for a UK resident, holding property through a company is a bad idea (I think this is what you mean). Although you do see some of the more expensive properties held through companies, especially when the owner is a 'non-dom'.

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Thirdly no matter how the specifics pan out, isn't this a major opportunity for HPCers to promote our agenda for a change? For years government intervention and media spin has been against us, but haven't we been handed some powerful amunition here? There is no doubt there was a concerted effort over the past ten years on the part of those who had an interest in talking up house prices. But the tables have turned. We should be doing all we can to spread panic among second home owners and BTLers over the new CGT rules. If we all hit forums, comments pages on articles, blogs, phone ins and so on could we make a difference? Just a comment here and there, "I was going to use my second home as a pension but I've decided to sell it before the tax hike kills my profits" and so on.

There was a post about Foucault on this board a few years ago, and the application of his discourse analysis to the way the housing market is constructed. We have a real and rare opportunity to shape the discourse to our advantage. Language is power.

I agree. One opportunity to follow up would be for HPC'ers to add Readers Comments to the following Daily Mail article (the Daily Mail has a wide readership so our comments would potentially be read by a large number of people) - see:

http://www.dailymail.co.uk/news/article-1279244/George-Osborne-cut-corporation-tax-amid-row-plans-hike-capital-gains-tax.html

We could also do with HPC'ers, if possible, adding to Readers Comments on other Newspaper, forums, etc. websites - it only takes as long as adding a comment on HPC.

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  • 277 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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