Business
Reeves’ ‘mansion tax’ makes ‘no sense’, former IFS director warns
Rachel Reeves’s plans to levy a “mansion tax” on high-value properties make no sense and could cause the Treasury to lose money, one of Britain’s leading economists has warned.
Paul Johnson, the former director of the Institute for Fiscal Studies (IFS), told The Independent he was “staggered” at reports that the Treasury is considering such a move, saying it could “block up the entire housing market”.
His intervention came as mortgage brokers and financial planners rounded on the chancellor after reports that she is considering hitting the owners of expensive properties when they sell to plug a £40bn hole in the public purse.
The mooted plans would mean higher-rate taxpayers paying 24 per cent of any gain in the value of their home, while basic rate taxpayers would be hit with an 18 per cent levy. Currently, capital gains tax is not paid on the sale of primary residences.
The threshold is still under consideration, sources told The Times, but a £1.5m starting point would hit around 120,000 homeowners who are higher-rate taxpayers. with capital gains tax bills of £199,973.
Mr Johnson called for a major overhaul of housing taxation as a whole, warning that levying capital gains tax on high-value properties at the same time as stamp duty would mean “no one would ever sell their properties”.
“I think there are all sorts of practical problems with it. It would gum up the housing market at the top end hopelessly. So I think, personally, it’s a non-runner. I think it would be very hard to design in a way that would raise significant money, and indeed, it could lose the Treasury money. Because, you know, you could lose the money you’re currently getting in stamp duty.
“I just can’t believe that they’re considering it. I’m staggered that they’re flying this flag. It, to me, makes no sense.”
Calling for an overhaul of housing taxation, Mr Johnson said council tax was “far too low on expensive properties” while stamp duty is a “disaster area”. But he said that “talking about [levying] capital gains tax when you’ve still got stamp duty would clearly be hopeless. You need to think about these in conjunction with one another. It’s just not sensible in any world to be talking about these things individually.”
Mr Johnson said the stagnation in the property market would be made even worse if the Conservatives pledged to reverse any such policy. “That would guarantee that nobody would move. People would hope that someone else would win the next election and wait to sell. So there’s a huge practical problem there.”
Property experts also warned that such a plan would stall housing sales and add to the exodus of the super-rich from the UK.
Financial adviser Scott Gallacher, a director at Rowley Turton wealth management, said a level of £1.5m would prevent most older homeowners, particularly those who bought properties in the 1980s and 90s, from selling houses.
He added that this would “kill off the upper end of the property market” and be difficult to implement. Mr Gallacher said: “It would be insane if it creates a cliff edge in that properties over £1.5m are subject to capital gains tax on the entire gain, as properties sold at £1.49m would incur no CGT, whereas £1.5m might be a six-figure bill. If it’s only on gains above £1.5m, then the CGT raised would be minimal, as potentially you’d be exempting six or even seven-figure gains.”
He added: “Homeowners, especially older ones, who perhaps bought their houses in the 1970s or 1980s, would be daft to sell and incur a huge CGT liability. Instead, they would be incentivised to hold on to the home until they die and pay no CGT.”
Simon Gerrard, chairman of Martyn Gerrard Estate Agents, warned that a mansion tax plan would leave families who bought homes in London more than a decade ago facing “eye-watering” tax bills. “Meanwhile, those who are actually wealthy know how to bypass these moves and won’t pay it,” he said.
He told The Independent: “After the deadline passes, people will simply not sell their homes. The property market above the threshold will die until Labour are voted out and the policy is repealed under a more sensible government.”
Laith Khalaf, head of investment analysis at AJ Bell, said the tax-free nature of primary residences was “deeply embedded in the psyche of homeowners”.
He warned: “A mansion tax set at high level would naturally cause people to worry it was just the thin end of the wedge, and the next time the government needs a bit of money they could just lower the threshold.
“It would also be an impediment to mobility in the housing market, as those with properties which might fall foul of the tax would be inclined to sit on them for longer, leaving a log jam in the housing ladder below them.”
And critics warned the tax change would add to the reported exodus of super-rich individuals fleeing Britain. Stephen Perkins, managing director of Yellow Brick Mortgages, said: “I can see a lot of families in London being caught with this higher tax bill, and it may push more wealthy tax contributors to exodus the UK, which is already a problem following the Chancellor’s last budget.”
A Treasury spokesman said: “The best way to strengthen public finances is by growing the economy, which is our focus. Changes to tax-and-spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn
“We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s Budget we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.”
Business
Private sector data: Over 2 lakh private companies closed in 5 years; govt flags monitoring for suspicious cases – The Times of India
NEW DELHI: The government on Monday said that over the past five years, more than two lakh private companies have been closed in India.According to data provided by Minister of State for Corporate Affairs Harsh Malhotra in a written reply to the Lok Sabha, a total of 2,04,268 private companies were shut down between 2020-21 and 2024-25 due to amalgamation, conversion, dissolution or being struck off from official records under the Companies Act, 2013.Regarding the rehabilitation of employees from these closed companies, the minister said there is currently no proposal before the government, as reported by PTI. In the same period, 1,85,350 companies were officially removed from government records, including 8,648 entities struck off till July 16 this fiscal year. Companies can be removed from records if they are inactive for long periods or voluntarily after fulfilling regulatory requirements.On queries about shell companies and their potential use in money laundering, Malhotra highlighted that the term “shell company” is not defined under the Companies Act, 2013. However, he added that whenever suspicious instances are reported, they are shared with other government agencies such as the Enforcement Directorate and the Income Tax Department for monitoring.A major push to remove inactive companies took place in 2022-23, when 82,125 companies were struck off during a strike-off drive by the corporate affairs ministry.The minister also highlighted the government’s broader policy to simplify and rationalize the tax system. “It is the stated policy of the government to gradually phase out exemptions and deductions while rationalising tax rates to create a simple, transparent, and equitable tax regime,” he said. He added that several reforms have been undertaken to promote investment and ease of doing business, including substantial reductions in corporate tax rates for existing and new domestic companies.
Pakistan’s textile exports surged to $6.4 billion during the first four months of the 2025-26 fiscal year, marking the highest trade volume for the sector in this period.
According to the Pakistan Bureau of Statistics (PBS), value-added textile sectors were key contributors to the growth.
Knitwear exports reached $1.9 billion, while ready-made garments contributed $1.4 billion.
Significant increases were observed across several commodities: cotton yarn exports rose 7.74% to $238.9 million, and raw cotton exports jumped 100%, reaching $2.6 million from zero exports the previous year.
Other notable gains included tents, canvas, and tarpaulins, up 32.34% to $53.48 million, while ready-made garments increased 5.11% to $1.43 billion.
Exports of made-up textile articles, excluding towels and bedwear, rose 4.17%, totaling $274.75 million.
The report also mentioned that the growth in textile exports is a result of improved global demand and stability in the value of the Pakistani rupee.
UK investment bank Peel Hunt has given some support to under-pressure Chancellor Rachel Reeves over last week’s Budget as it said efforts to boost the London market and invest in UK companies were “positive steps”.
Peel Hunt welcomed moves announced in the Budget, such as the stamp duty exemption for shares bought in newly listed firms on the London market and changes to Isa investing.
It comes as Ms Reeves has been forced to defend herself against claims she misled voters by talking up the scale of the fiscal challenge in the run-up to last week’s Budget, in which she announced £26 billion worth of tax rises.
Peel Hunt said: “Following a prolonged period of pre-Budget speculation, businesses and investors now have greater clarity from which they can start to plan.
“The key measures were generally well received by markets, particularly the creation of additional headroom against the Chancellor’s fiscal rules.
“Initiatives such as a stamp duty holiday on initial public offerings (IPOs) and adjustments to the Isa framework are intended to support UK capital markets and encourage investment in British companies.
“These developments, alongside the Entrepreneurship in the UK paper published simultaneously, represent positive steps toward enhancing the UK’s attractiveness for growth businesses and long-term investors.”
Ms Reeves last week announced a three-year stamp duty holiday on shares bought in new UK flotations as part of a raft of measures to boost investment in UK shares.
She also unveiled a change to the individual savings account (Isa) limit that lowers the cash element to £12,000 with the remaining £8,000 now redirected into stocks and shares.
But the Chancellor also revealed an unexpected increase in dividend tax, rising by 2% for basic and higher rate taxpayers next year, which experts have warned “undermines the drive to increase investing in Britain”.
Peel Hunt said the London IPO market had begun to revive in the autumn, although listings activity remained low during its first half to the end of September.
Firms that have listed in London over recent months include The Beauty Tech Group, small business lender Shawbrook and tinned tuna firm Princes.
Peel Hunt added that deal activity had “continued at pace” throughout its first half, with 60 transactions announced across the market during that time and 10 active bids for FTSE 350 companies, as at the end of September.
Half-year results for Peel Hunt showed pre-tax profits jumped to £11.5 million in the six months to September 30, up from £1.2 million a year earlier, as revenues lifted 38.3%.
Peel Hunt said its workforce has been cut by nearly 10% since the end of March under an ongoing savings drive, with full-year underlying fixed costs down by around £5 million.
Steven Fine, chief executive of Peel Hunt, said: “The second half has started strongly, with the group continuing to play leading roles across both mergers and acquisitions and equity capital markets mandates.”
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