Last week the Office for Tax Simplification (OTS) published its report for the government having been instructed to review the efficiency of Capital Gains Tax (CGT) and whether there are loopholes or areas where it is not functioning properly.
Two key points that came out:
Add to this, we expect inflation to be the big thing for the coming 10 years. There is no way that sovereign nations can afford to repay their covid-19 debts. There is only one way out of this and that is to inflate their way out of debt. Inflation devalues debt. 5%pa compounded inflation over 10 years means 63% total inflation over that period. If governments have inflation of just 5%pa for 10 years, government debt would be devalued by 63% or reduced to the equivalent 37% of its value as at today.
Inflation is coming with even the Federal Reserve 2 months ago suggesting it will no longer use interest rates as a means of controlling inflation for the “foreseeable future”.
This tells us that we face a period of low interest rates and higher inflation.
We saw it in the 1980s and it is likely to happen again.
Higher property values also mean Government will have ever higher revenue from stamp duty, capital gains tax, inheritance tax and not forgetting their property stakes in Help to Buy and Affordable Home schemes. If the equity value of a property rises, the government share e.g. 20% of the value in Help to Buy goes up.
Property prices are likely to dip in 2021 and then we see a recovery and significant rises from 2022/23 onwards.