Homeowners would be taxed on the increase in the value of their home under bombshell plans being drawn up by Labour leader Jeremy Corbyn, The Mail on Sunday can reveal.
The proposal to scrap the Capital Gains Tax exemption on main homes would force owners to pay income tax on the profits when they move home – and lead to a ‘double whammy’ levy on their estates when the owners die.
Yesterday Boris Johnson – making his first political intervention since the revelations about his domestic dispute with girlfriend Carrie Symonds – described the plan as a ‘mad’ house tax which would ‘cripple every Brit who owns or wants to own their own home’.
Homeowners would be taxed on the increase in the value of their home under bombshell plans being drawn up by Labour leader Jeremy Corbyn
With Mr Johnson still favourite to beat Jeremy Hunt to become the next Prime Minister, the row could be a foretaste of titanic ideological battles to come ahead of the next General Election with Mr Corbyn – whose own childhood home was a 17th Century manor house in Shropshire.
The homeowner tax idea is included in Land For The Many – a report commissioned by Labour and published on its website earlier this month – which has already caused fury by calling for a mammoth tax raid on middle-class parents who help their children get on the housing ladder by replacing inheritance tax with a ‘lifetime gifts tax’.
But the report also cites approvingly proposals by the Institute for Public Policy Research (IPPR) for primary residences to no longer be exempt from capital gains tax, which is levelled at people who earn more than £50,000 a year at 20 per cent of the profits.
The move would hit homeowners in London and the South East particularly hard, adding tens of thousands of pounds to their average cost of moving house.
Shadow Cabinet Minister Jon Trickett, a key ally of Mr Corbyn, has described the report as ‘ground breaking’ and ‘part of our policy development process for the next General Election’ – although last night the party insisted that the homes tax was ‘not under consideration’ for the next manifesto.
Mr Johnson told The Mail on Sunday: ‘This mad “tax on all your houses” would cripple every Brit who owns or wants to own their own home. The choice facing Britain couldn’t be starker: Corbyn or modern, one-nation Conservatives.
‘This is why the Conservative Party needs a leader with a proven track record of beating the loony Left to take on Labour and defeat Corbyn and his apparatchiks, for the sake of the country.’
The proposal to scrap the Capital Gains Tax exemption on main homes would force owners to pay income tax on the profits when they move home. Above: Mr Corbyn’s plans come despite him having grown up in Yew Tree Manor, in Shropshire, which dates from the 17th Century
Mr Corbyn’s team are canvassing widely for ‘redistributive’ policies to put in a draft manifesto in anticipation of a snap Election in the autumn if the next Tory leader is unable to break the Brexit impasse.
This newspaper has also been told by Labour sources that Shadow Chancellor John McDonnell has already mapped out the first hours of a Labour government if the party wins the next Election.
Dubbed the ‘4am plan’, it would involve him driving to the Treasury as soon as it became clear that Labour had a majority to form a government and imposing exchange controls to stop the pound from crashing – as investors take fright at the prospect of a Corbyn administration.
Mr McDonnell has also admitted that he would make the next Governor of the Bank of England someone who was ‘in tune with our ideas’ – by subscribing to the same hard-Left politics.
And he would strip the Bank of England of its independence, saying he would end the Bank’s control over interest rates ‘in the first week of a Labour government’.
And he has said that he is studying plans for a ‘wealth tax’ which would seize 20 per cent of the assets of the richest 10 per cent of Britons.
This newspaper has also been told by Labour sources that Shadow Chancellor John McDonnell has already mapped out the first hours of a Labour government if the party wins the next Election
Land For The Many backs the capital gains exemption on the grounds that ‘it is not only rental income that makes homes attractive as financial assets.
‘It is also the expectation of making capital gains on the value of the land. A well-designed tax system would remove this expectation’.
The report adds: ‘Applying a capital gains tax to main residences too would allow us to limit the wealth inequality arising from the housing boom.
‘The IPPR have proposed scrapping the entire capital gains system and incorporating income from asset price appreciation (as well as income from dividends) into the income tax schedule. In general we think this is a sensible proposal.’
The report also mentions the IPPR’s proposals for scrapping capital gains tax exemptions on death, saying: ‘This reform would involve removing all exemptions, allowances and reliefs that currently exist for both capital gains tax and dividend taxes…we argue for the removal of the relief on capital gains upon death.’
Assets are already charged inheritance tax on death, meaning that they would be subject to double taxation.
Mr Corbyn faced a backlash last week when the same report said that if children were forced to pay income tax on everything their parents give them above a value of £125,000 – less than a third of the current inheritance tax threshold – then it would allow the ‘better sharing out’ of ‘unearned windfalls’.
It prompted fears among parents that children will be taxed on financial assistance given to them during their lifetimes, including financial help to buy a home.
Conservative Vice-Chairman Marcus Jones said: ‘Under Jeremy Corbyn, Britain’s homeowners would be under siege with yet another Labour tax raid on people’s homes.
Only the Conservatives are committed to lowering taxes and helping people achieve homeownership though policies such as Help To Buy and cuts to stamp duty for first-time buyers.’
Mr McDonnell has previously studied the wealth tax theory of Left-wing economist Professor Greg Philo, arguing that a 20 per cent tax on the wealthiest ten per cent of the population would raise £800 million.
Prof Philo confirmed this weekend that he had discussed his theory with members of the Scottish Labour party, but not with the Labour leadership in London.
One of the favourites to succeed Mark Carney as Governor of the Bank of England if Mr Corbyn enters No 10 is Graham Turner, who is one of Mr McDonnell’s key advisers.
Mr Turner, who has been described as a ‘committed Marxist’, has previously donated money to George Galloway’s Respect Party.