3 March 2008 17:13
WHAT'S the opposite of joined-up government? Whatever term you care to come up with, the decision to cut capital gains tax on second homes is surely a prime example of it.
In a report published today, the government's own rural advocate says he is 'disappointed' by the cut. Many people would put it more strongly than that but the criticism from Dr Stuart Burgess of the Commission for Rural Communities is somehow all the more powerful for being understated. 'I would urge government to consider removing this tax reduction from the sale of second homes,' he says.
Describing lack of affordable housing as 'the single biggest issue' facing rural communities, he also calls on the government to give rural housing more priority in regional spatial strategies and regional housing board allocations and to encourage local authorities to ensure that extra money from second homes council tax is spent on housing.
The tax cut is part of a wider reform of capital gains tax that was intended to tax super-rich private equity bosses more heavily by introducing a flat rate 18% tax rather than 40% tapering down to 10%. However, for anyone who has bought a second home - or a buy to let investment - in the last ten years it means a substantial tax cut from April. And it makes second home ownership a far more tax-friendly proposition in future.
If that wasn't unjoined-up enough, the proposed cut comes at a time when an independent review for the government by Lib Dem MP Matthew Taylor is set to recommend new curbs on second home ownership. According to the weekend papers, the government is prepared to back new powers for local authorities in the most sought-after rural areas to stop outsiders buying property unless it will be their main residence.
With only a month to go before the tax cut is due to be introduced, campaigners might be forgiven for thinking it is too late. However, just over two years ago the government had a last-minute change of heart after it realised the implictions of an equally ludicrous proposal to offer tax subsidies to higher-rate tax payers to buy property through their pensions. It's never too late to admit you've got it wrong.
Posted by Jules Birch, Mar 3
Posted in Rural housing , Second homes