The Chilling Effect Of Tax Hike Rumours

It seems Andy Burnham's wildfire CGT rumours are already spooking the property market.

We've 'endured' the damaging effects of property tax hike rumours during the months-long run-up to Rachel Reeves's tax-grabbing budgets. And, as if on cue - history looks to be repeating itself, with all the signs that Burnham has a major devolution agenda that needs funding through....you've guessed it - increasing taxes yet again.

So far, Labour has refrained from publishing a tax manifesto. But the last few weeks has seen tax advisers up and down the country dealing with landlords, developers and business owners looking to crystallise gains before a budget that's yet to be scheduled.

Uncertainty is its own kind of tax. It carries consequences for transaction volumes, rental supply and the wider economy that go well beyond whatever the eventual policy turns out to be. Andy Burnham's team, is said to be examining "more targeted changes"; for example, revisiting the rates charged on share sales, second homes and other assets, potentially to help fund the removal of green levies from household bills.

Burnham is well known to have long backed a land value tax as a replacement for council tax and stamp duty. None of this amounts to settled policy, but the rumour, undenied, is unsettling. Compliance complexity and costs, tighter possession rules and the ongoing minimum energy efficient standards (MEES) timeline for energy efficiency, give more pause for thought.

A landlord weighing up an exit for these reasons, now has an additional incentive to act sooner rather than later, simply to avoid the risk of selling into a higher CGT rate.