....Last week, Treasury Chief Secretary Paul Boateng refused to rule out the possibility of a capital gains tax on main homes. He was challenged in the Commons by Letwin's deputy, Tory frontbencher George Osborne, who asked: 'Will you give an assurance that capital gains tax on people's homes will not be one of the taxes that Labour increases, if it wins the Election?'
Boateng dodged the question and said: 'We will do what is right by the economy and we will keep our promises on tax.' Pressed further by Osborne to 'reassure home owners that capital gains tax will not be levied on their homes, and that no one in the Treasury is looking at that', Boateng again refused specifically to rule it out.
Osborne said: 'We have suspected for some time that the Treasury has been working on secret plans to introduce a bombshell tax on people's homes. Now we have the clearest indication yet that this is one of their ploys for clobbering people if they win the Election.
Capital gains tax is levied on main homes in Germany and France. However, more than seven out of ten British families own their own home, compared with one in two French citizens and just 40% in Germany.
In the UK, the collapse in pensions since Labour came to power has forced millions of people to rely on rising house prices as an alternative means of financing their retirement.
Assuming the Government applied the existing capital gains tax criteria, your exact liability would depend on your income, whether you had made any other capital gains during the year, and how long you had owned the property, as your liability begins to fall if you have owned it for more than three years.
However, many people would find themselves paying tax of 40% on the amount their home had increased in value, minus a small allowance, currently set at £8,200.
With a 40% tax rate, a house that had increased in value by £50,000 would incur capital gains tax of £16,720. An increase in value of £100,000 would cost £36,720 in tax, while a £200,000 increase in value would cost £76,720.
