Landowners at risk of 'garden tax'
Filed under: Tax
While the Conservatives have rejected the Lib Dem's calls for a mansion taxr, George Osbourne is thought to be considering an alternative squeeze on the rich ahead of his autumn statement this week.
According to the Sunday Times Osborne plans to revive an old rule which has been in the statute book since the 1960s. It would see Capital Gains Tax (CGT) charged at 28% on the sale of land above 1.23 acres, around the size of a football pitch.
Under current rules, Private Residence Relief means homeowners can sell their main residence and its grounds free from CGT where the garden is less than 1.23 acres.
Full relief can still be claimed where grounds are bigger, if the owners can show the grounds are required for 'the reasonable enjoyment of the house as a resident'.
The Sunday Times reports that HMRC confirmed it was making it harder to claim above the limit by cross checking stamp duty records paid by most homes owners with CGT declarations by sellers.
This alternative to the much debated 'mansion tax' is unlikely to be well received by the wealthy, but it seems that Osborne has little choice but to address the deficit with hard hitting tax measures.
"Since the budget, the outlook for the UK economy has deteriorated and Government receipts have disappointed even more than this year's weak growth would normally suggest," explains Carl Emmerson, deputy director of the Institute for Fiscal Studies.
"As a result, the Chancellor might find himself having to abandon one of his fiscal targets. If much of the additional weakness this year feeds into a permanently high outlook for borrowing, then in order to comply with his fiscal target, Mr Osborne would need to announce yet more tax rises or spending cuts for the next parliament in next week's Autumn Statement.
"In that case the planned era of austerity could run for eight years – from 2010–11 to 2017–18."