TaxPersonal TaxTreasury denies ‘house sales’ tax

Treasury denies 'house sales' tax

Treasury minister Ruth Kelly has denied the government has been in discussion with PricewaterhouseCoopers over plans to impose a 40% tax on the profits of all house sales.

Link: UK overspending may mean tax rises

It has been claimed that the government was considering extending the 40% capital gains tax on the profits of people selling second homes to all house sales. One newspaper alleged Treasury officials had been discussing this with accountants PricewaterhouseCoopers.

But Kelly said the suggestion the government was about to do this was ‘completely without foundation’ backing up a Treasury spokesman’s comment that the suggestion was ‘unadulterated garbage’.

PwC also denied the reports.

Kelly also said the government was on track to meet all its spending commitments and fiscal rules without increasing taxes.

However, Tory shadow chancellor Michael Howard said Brown and Kelly new that ‘The public finances are in a mess despite 68 tax rises.’

Ernst & Young’s Item Club warned that chancellor Gordon Brown may have to consider tax rises before the next election.

Using the Treasury’s own economic model, it said that borrowing was soaring and was set to be between £6bn and £8bn above the Treasury forecasts.

The club said this meant that unless Brown broke his own rule about not borrowing to pay for revenue spending such as public sector salaries, Brown would either have to cut spending or raise taxes.

The ITEM club believes that with the government investing so much credibility in improving public services through extra spending, tax increases were the only option.

But Kelly denied that the government’s financial strategy was in tatters.

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