In the same way as we are capping how much people can claim in benefits, we are now putting a cap on the amount of tax breaks the wealthy can use to cut their income tax bills.
Tax reliefs exist for good reasons, to promote activities such as business investment and philanthropy. But it is unfair that these reliefs can be used without limit to reduce income tax liabilities. The result is that some people with very high incomes in this country who are managing to play the system and pay incredibly low rates of tax.
Thanks to the Lib Dems the government is going to cap all of these currently uncapped reliefs. We want to see millions of ordinary people paying less tax, not millionaires.
This is the Tycoon Tax that Nick Clegg has been talking about recently – ending the unfairness of people exploiting the complexity of Labour’s tax system to avoid paying their fair share. With all tax reliefs being capped the richest people will have to pay more.
The Daily Telegraph said this effectively meant that no-one would pay less than 25% in tax, whereas at the moment some wealthy tycoons pay 10% or less.
Stamp Duty
We may not have a Mansion Tax yet, but we are getting more money from people who buy mansions. Currently you pay 5% stamp duty if you buy a house worth more than £2m, we raised that immediately on the day of the Budget – getting hundreds of millions more pounds from the wealthiest. For people buying mansions worth over £2 million the stamp duty goes up to 7% from 5% .
Ending Stamp Duty dodges
Another loophole Labour failed to stop is people buying properties in company names – meaning that stamp duty is avoided when the property is sold. This means that there are numerous companies, the majority off-shore, that consist entirely of one house. From today we have introduced a new 15% rate of stamp duty to be applied to residential properties over £2m purchased by companies and organisations.
And in addition we will consult on introducing an annual charge on any residence valued at over £2m owned by companies and organisations, to begin in April 2013. This is a mansion tax for tax dodgers.
And to support this, we are extending the Capital Gains Tax regime to capture gains on the sale of UK residential property and shares or interests in such property by non-resident, non-natural persons (i.e. companies)
