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Second-class stamp posted amid stealth

By Mark Chilton

A Budget for homebuyers – hardly. More an announcement that the main target for stealth tax is moving from National Insurance and pensions to the homeowner – and the Chancellor can sit back and watch inflation fill his coffers.

First, the positives. Doubling the stamp duty threshold will allow up to 350,000 homebuyers to escape a bill of as much as £1,200. It will help the property poorest but the failure to regionalise at least this starter threshold, not making the tax progressive and no announcement on future indexation all disappoint since it could have been funded by a higher tier over £1m – real redistribution of property wealth.

Little is known about the shared ownership initiative with the Council of Mortgage lenders – particularly the CML themselves judging by their press reaction. It is a good and necessary idea but the partnership proposed by Mr Brown means he wants lenders to take the equity share. He should have considered other more willing investor groups, particularly with residential investment becoming Sipp-eligible next year.

Now to the stealth taxes. Everyone seems overly excited by the superindexation of IHT thresholds. Actually, it is a massive underindexation in real house price terms which will bring substantial numbers of middle England families into IHT. If ever there was a vote-winner for Michael Howard, it would be to exclude principal residences from IHT. Second, the one negative from the harmonisation of civil couples’ rights is the loss of their ability to each hold a CGT-exempt property after December 5. Again, the take on CGT on the burgeoning buy-to-let sector should have been approached with a lifetime cap approach similar to the new pension cap.

It is not what the Chancellor did that hurts – it is what he didn’t. And rather than subtly suggesting that actuaries need formal regulation, might he not have better aimed at estate agents?


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Is buy-to-let a bubble about to burst? “No, it is not a bubble set to burst but it is certainly a dead market and no one new is coming into it. It is harder to get get high loans to value, too.” Peter Sharman, Optimum Financial Solutions “Yes, I think so. London is saturated and […]

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