Labour’s Autumn Budget has attracted some controversy after the party upped taxes by £40 billion a year, with most of the money coming from an increase to employers’ National Insurance Tax.
Inheritance Tax rates have been frozen until 2030, and Income Tax until 2028. Meanwhile landlords will be furious that the 3% stamp duty surcharge has been raised to 5%.
While these are risky maneuvers, fundamentally Labour is in dire need of cash – even if the “£22bn black hole” may be exaggerated – so some tax increases were always going to happen.
Doing so was never going to be popular, as much of the coverage in The Telegraph demonstrates. However if Labour was going to raise taxes, it makes sense to do it now.
Why? It’s early in the parliament, giving the government years to win back favour with the public before the next election.
Keir Starmer and Labour have made difficult decisions, and now they have the opportunity to demonstrate whether these tax rises will represent value for money.
In the property market’s case can Labour fix the court system? I think landlords wouldn’t mind paying a bit more tax if they had certainty they could evict a bad tenant.
Outside of property it’s no secret that NHS waiting times have increased throughout the Conservative Party’s leadership, so there’s a vital need to invest in public services like healthcare.
5% stamp duty surcharge and CGT
I’m not sure inflicting a 5% stamp duty surcharge on landlords was a wise choice.
You suspect the move won’t have a big impact on the public purse, given that fewer landlords will buy new properties thanks to this move, so it’s likely to hit new rental stock without raising vast amounts of money.
It should at least benefit first-time buyers in the short-term, who will likely face less competition from investors, but I’m not sure it’s worth it.
In terms of positives I’m heartened that the government decided to leave Capital Gains Tax on property alone.
In my view that eliminates the need for existing investors to leave the market in droves, given that they are largely unaffected by the Autumn Budget, despite all the scare stories in the lead up.
Conclusion
Labour has made difficult decisions, and it’s now up to the party to prove they are worth it.
The party has championed ‘economic growth’ as its target, and it now has four years to convince the public that it can put the country on the right track.
If the party raises taxes without improving infrastructure like new housing and better public services, then it will surely be in trouble with the electorate come 2029, or whenever the next election happens.
