The Keystone Cops were out in force yesterday in the Commons, as exemplified by the OBR’s involuntarily (we suppose) leaking of the Budget before the Chancellor’s speech, which is a sackable, if not criminal, offence.
To my memory the only other historic budgetary indiscretion was by the former Chancellor, Hugh Dalton, in Clement Attlee’s Labour government.
On November 12, 1947, minutes before delivering his Budget, he spoke to John Carvel, an Evening Standard journalist and mentioned several key measures, including critical changes to Purchase Tax.
The information was unfortunately printed before Dalton had delivered his speech to Parliament and as a result, the Chancellor was subsequently forced to resign.
DAMP SQUIB
Despite the febrile debate about the Mansion Tax over the last four to five months, it has actually turned out to be a ‘damp squib’ and will only raise circa £400million for the Exchequer from 2028 onwards – which, with a bit of luck, will be in the next electoral term, administered by a new government. Hope springs eternal!
Overtures of the ‘Pasty Tax’, which George Osborne tried to introduce in 2012, and would have raised zippo for the Exchequer, springs to mind.
The damage that all the posturing on this subject has done to property transactions, which have remained in suspension or not taken place, is incalculable and the secondary effects on public spending and growth during this time, will be immense.
INFORMATION LEAKS
As is often the case, reality is so much less frightening than fevered expectation, particularly when it is needlessly elongated by The Chancellor’s leaking of information ahead of the Budget, which has been the case now for far too long.
LEARNING ON THE JOB
Why on earth she needed to delay the Budget by at least two months we will never know.
But I suppose this is the price you pay for lack of experience and the need for learning ‘on-the-job’.
THREE-BED TEDDINGTON
The Mansion Tax should be renamed ‘Home Tax’ since the threshold for the first trigger payment is for properties worth £2million and over, when £2500 is payable in 2028 – which hardly buys you a ‘mansion’ in London and more likely, a three-bed terrace house in Teddington.
The second tier of this dreaded tax kicks in on values of properties over £5million, when £7,500 is payable and both these levies are subject to the CPI Inflation Index each year.
THE GREAT ESCAPE
Given that there is probably more deflation in property values today in London (particularly, at the higher end – which has been the case since George Osborne introduced the draconian SDLT changes in 2014), I can anticipate that some lucky devils (who are at the critical margin of the tax trigger today) could either find themselves escaping the Tax altogether or dropping into a lower band further down the track.
I don’t envy the task of the District Valuers trying to do a desk-top valuation on properties which may qualify for Mansion Tax.
BUNCHING UP OF VALUES
Predictably, there will be ‘bunching up’ of values at the £2m and £5m thresholds and the push backs from aggrieved, litigious, householders, who will be challenging the valuations, will be palpable.
Let us not forget, that these valuations don’t take into consideration the condition of the interior of the property, which technically could change Capital Values by up to 30/40%.
Good luck to all those involved in this prickly business.
It is interesting to note, that the Mansion Tax and the Council Tax regimes are quite separate, as the earnings from the former will favour The Exchequer, whilst the latter favour the local councils.
CONFIDENCE ARRIVES ON FOOT… LEAVES BY HORSE
We all know that ‘confidence arrives on foot and leaves by horse’.
Now that the full details of the Mansion Tax calculation and its deferred payment arrangements are known, I would have thought that there would be an avalanche of contracts exchanged before Christmas, which is no bad thing for liquidity in the marketplace and estate agents’ coffers.
Ho, Ho, Ho… this could be a ‘White Christmas’ for the Residential Property Market. Well, you never know.
Frankly, I don’t think underlying residential property values will change much from here on out, particularly as there will not be another fiscal event for a year.
Thank goodness then that there was no Wealth Tax or changes to Capital Gains Tax which could affect the ‘better off’ and private landlords.
Also, the Inheritance Tax (IHT) levels have remained intact which was of course another cause for concern amongst the cognoscenti.
MUCH ADO ABOUT NOTHING
I would describe this Budget as ‘Much ado about nothing’ and it is just a pity that the constant leaking of information, which has spooked many homebuyers since the summer, and needlessly undermined confidence for all this time, occurred.
Perhaps now, home buyers can get on with their lives and start making meaningful commitments instead of being caught like ‘rabbits in the headlights’.
