Latest cash grab on home owners is simply not fair

Another week and another slew of proposals to fill the £50 billion government black hole by targeting homeowners. For Chancellor Rachel Reeves and the Treasury there seems to be only one source of revenue available to them and that is the hard-pressed, hard-working people who have bought a home and therefore must be punished for it.

The latest proposals include replacing stamp duty with a national proportional property tax carrying an annual levy of 0.54 per cent of value on all properties valued at higher than £500,000 rising to 0.82 per cent on properties valued above £1m. This would be triggered by a property sale with the charge imposed in perpetuity on the value above £500,000 and the higher rate above £1m.

Of course, this does not apply in Scotland where we have the Land and Buildings Transaction Tax (LBTT), but it is inconceivable that the Scottish Government would not replicate such a system if it resulted in substantial additional revenues.

The second proposed change is the removal of council tax to be replaced with a charge of 0.44 per cent on all properties up to £500,000 in value. The idea is that revenue raised from properties valued up to £500,000 would go to local authorities while the national property tax would go to central government.

A further proposal is to end the current exemption from capital gains tax from the sale of a primary residence with an as yet undecided starting value. Those liable would pay 24 per cent of any gain made on the sale of a property for higher rate taxpayers and 18 per cent for basic rate.

Who would be the main target of these taxes? Most likely someone who has bought a property decades ago and has seen its value increase substantially (although much of this will simply be inflation) and is now being punished for a decision made in their thirties or forties.

This triple prong approach to taxation (which would include inheritance tax (IHT) changes as outlined in my last column) would mean that homeowners will be charged more to move home, sell their property or, if they die.

These are taxes not aimed at the rich but specifically targeting ownership by the comfortable middle. Those who have saved, strived, and struggled to buy a home for themselves and their family will now be put in financial jeopardy to bail out a government that has simply run out of ideas and is seeking to punish one group over everybody else.

Some will say that if you have a half million-pound home then you are rich. This is simply not true. The owners of these homes will be the teachers, doctors, policemen, office workers, tradesmen and others who have owned a home for many years and had hoped that this would make them more secure in their retirement.

This targeting of homeowners is unsustainable and will also have a detrimental impact on the housing market. Where is the incentive to move if all it does is make you poorer? Why save or accumulate assets if they are just transferred to the state when you move house or die? Imposing such substantial changes on the housing market is simply a desperate cash grab from an increasingly desperate government.