Talk of scrapping stamp duty and replacing it with a sellers’ tax, as well as rebanding council tax, would prove to be an uphill struggle for the government.
That is according to James Nation (pictured), managing director of UK politics at consultant Forefront Advisors, who was formerly a special advisor to Rishi Sunak as Chancellor before becoming deputy head of the Number 10 Policy Unit.
Nation said: “The revenue foregone from stamp duty in the early years would be a problem and I think that sort of full-scale tax reform is disruptive. It is a bit ‘novel and contentious’ to use Treasury language.”
Charging capital gains taxes on main residences above a certain price could also prove unpopular, he warned.
Nation added: “I think it’s very tricky. I see this as similar to how the British public think about inheritance tax. It is uniformly unpopular even though the vast majority of the public won’t qualify and that’s because of the principle.
“You’d be saying to someone that in theory, if you improve the state of your property, there is a world in which the taxman would be able to come and take away some of that gain. That is a hard political sell.”
However, he believes charging National Insurance on rental income fits the philosophy of individuals like Torsten Bell, the former chief executive of the Resolution Foundation think tank, who is helping to draft the Budget.
Instead of reinventing the wheel, he reckons an easier sell would be revaluing properties in higher council tax bands.
Nation said: “The pull towards the (tax) status quo gets stronger, the weaker you feel. This is not a confident government that’s just won a majority coming in with their first budget.
“This is a government that I’m sure will have to do some quite big things simply because of the arithmetic, but also just needs this budget to go well.
“It means the scope for bolder, riskier, more radical options is slightly diminished. We will find out how diminished in nine weeks’ time.”