The UK government was today forced into a humiliating turnaround after only last week announcing plans to increase national insurance payments for the self-employed. Philip Hammond, seen as a safe pair of hands for the Tory government, was forced to announce the change today amid pressure from the Prime Minister Theresa May. So, if the government can cave in on national insurance could there be hope for property tax changes?
Does pressure work?
The Tory government has been under extreme pressure since announcing last week’s national insurance increase for the self-employed. This was seen as going against the party’s manifesto and many people were up in arms about the relatively small amount to be raised. A concerted effort by other political parties and those representing the self-employed seems to have caused a significant rethink at the top of the government showing that maybe pressure does work?
It is common knowledge that the UK has some of the highest property taxes in the world at a time when the UK economy and the UK property market are going through significant changes as we approach the triggering of Article 50. Surely now is the time to “throw a bone” to the property investment market after years of being milked for ever increasing taxes. Let’s not forget, the UK is in the midst of a major housing crisis not only for first-time buyers but for those looking at affordable rental properties.
If there was ever a moment to revisit property taxes in the UK, with some suggesting that stamp duty should be charged to the seller not the buyer, surely now is the time?
Thinking outside the box
Let’s not forget that by reducing some of the sky high property related taxes this should increase activity and ultimately, if the right balance is found, increase overall revenues. We only need to look at the Scottish government to see how a major revamp of the property market has led to a collapse in property tax related income. This is something that the Scottish government will need to review in due course because it has cost them literally tens of millions of pounds, which is a rather large chunk of their property related income.
Time and time again we hear promises of significant investment in the UK housing market only for this to be “kicked into the long grass”. Many of the promises have been repeated time and time again giving the impression that additional funding is being made available when this is just not the case. Quite why the authorities feel the need to use smoke and mirrors to hide the ever-growing lack of investment in UK housing is a mystery.
At this moment in time there is no suggestion of a short-term change in UK property taxes but the national insurance U-turn shows that concerted pressure does work. If ever there was a time for property investors and developers to come together with one voice it is now. The UK government we be on the back foot for the next two years, once Brexit negotiations have been triggered, and would likely give up some property tax income for a stable property market during this period?