Wednesday, October 14, 2015

Bad news for multi mllionaires

Price of £1m plus London homes slashed amid George Osborne’s stamp duty shake-up

The article is based on an analysis of Zoopla figures by the Evening Standard. hmm... "Frank Speir of buying agency Prime Purchase described the London market at above £2 million as “at a complete standstill” adding that even the credit crunch had less impact than stamp duty rises of recent years."

Posted by cyril @ 08:48 AM (4970 views)
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13 thoughts on “Bad news for multi mllionaires

  • This was a dreadful reaction to the Mansion Tax that will reduce tax receipts, reduce construction where prices (and thus demand) are high, and it is likely that common people will be drawn into these higher rates as prices rise over time.

    It also reduces labour mobility at the peak of the capability spectrum, with it being increasingly difficult for executives, etc. to move house to work where the market would place them, reducing productivity and opportunities for the economy as a whole.

    Whilst eliminating the slab system was to be welcomed, stamp duty at all simply hammers labour mobility, probably causing a net reduction in overall tax take, seriously undermining economic efficiency of the whole economy.

    I hate to say it, but at least the mansion tax did not penalise executives for moving house.

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  • I was speaking to an estate agent – south east based – last weekend, they were telling me that the circa 1m market was completely dead.

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  • Libertas
    You sound like an apologist for the more rabid Tories, Taxpayers Alliance, etc. A fall in prices of the ultra expensive houses will have a negligible effect on the economy.

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  • @1 Libertas I’m so pleased to hear you say that about the Mansion Tax. Unfortunately the majority of our taxes are on earned income so the penalty is on earning your income here rather than somewhere else. We are losing very valuable people to jurisdictions with lower taxes on earned income and higher taxes on rents, e.g. the US

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  • the UK market is dead

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  • so many houses in and around my area are being dropped in price and still no takers

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  • “We are losing very valuable people to jurisdictions with lower taxes on earned income and higher taxes on rents”

    Not true. Brits have gone to Australia more than to any other country (1.2 million) but Australia has one of the highest direct taxation rates in the developed world and relatively low property taxes

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  • @6 are you taking National Insurance into account? I had a quick look and Oz also has the farce of distinguishing between income tax and payroll tax but it’s a lot less than ours. Employer NI is 13.8% here vs around 5% depending on state. Employee NI here is 12% for the low and middle paid, yielding a fat 40.2% rate on earned income above £10,500. Throw in tax credit withdrawal and the like and you’re lucky to keep 12p of every extra pound that you earn. Oz equivalent of employee NI seems to be 2%. And Oz also has a fully funded pension system so not facing bankruptcy and repudiation of state pensions for people paying in now. Pity it’s full of Australians 🙂

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  • Yes, I took it all into account (or at least the data I referenced did). The highest (income tax) marginal rate for individuals is 47% and the average earner pays a higher rate of income tax than we do. No matter how you slice it, Australia does not fit your specification of a “jurisdiction with lower taxes on earned income and higher taxes on rents”.

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  • @8 I stand corrected. They luckily do have quite a lot of revenue from resource rents though although that’s plunging due to commodity prices crashing

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  • Yes, I once considered moving there when the exchange rate was almost 2.5:1 and an office building and house combined was less than a 3 bed semi in my part of the world. In those days a bloke from the consulate even came round to sell me the idea and offer help. I think you’d have to cut off a finger to get a similar offer now and house prices have multiplied several times over. Still prefer it here though.

    I’ve also lived in several parts of the States. Some places focus on sales taxes and some on income taxes but it all seemed to even out one way or another.

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  • Interestingly, Oz has been knocked off the top spot by the US in the last two years. Mansion tax in New York is unlimited, people are paying hundreds of thousands of dollars per year. The lowest property taxes are in places like Alabama and Louisiana, not exactly magnets for expats. Of course lots of factors at play though.
    I used to live in Washington State, which had no income tax, what a pleasure. Filing two returns is a gigantic waste of time. Florida and Texas also do well with no state income tax

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  • I’m not sure about that. In the last five years more than three times as many Brits have gone to Australia as they have to the US. For there to have been a reversal in the last two out of five years the mathematical shift would have to be huge. In any case, people tend to go for things like sunshine and adventure. I’ve never heard anyone say that they cant wait to go to Australia or the US because their tax regime is fundamentally different (not that they are really).

    http://www.thisismoney.co.uk/money/holidays/article-3033680/The-destinations-Britons-emigrating-revealed-Spain-number-three.html

    l lived in Florida for a bit. It makes little difference that they don’t have state income tax because they still have the big one which is Federal income tax with a top rate of 39.6%. Florida is also more stringent on sales tax than other states (for example you had to pay it on out of state internet sales that were usually excused by other states) so your non property taxes end up being the same or more than in states where they have a state income tax. It’s a big deal when you buy a car and pay sales tax in Florida vs other states with no sales tax. The US taxation system does at first seem messy but its the only country where I didn’t need an accountant to do my taxes. A $20 software package usually got my taxes done in a couple of hours and there is a cheap accountant in almost every strip mall if you need an hour of help.

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