The Conservative Party's tax proposals

The Conservative Party's tax proposals so far, as announced by George Osborne today:

• abolition of stamp duty land tax for first-time buyers of property costing below £250,000; and
• raising of the inheritance tax nil rate threshold to £1m.

The current stamp duty land tax rates for residential property are as follows:

• 0 per cent for properties costing £125,000 or less (good luck finding a house at this price in the South of England!)
• 1 per cent for properties costing more than £125,000 but not more than £250,000;
• 3 per cent for properties costing more than £250,000 but not more than £500,000; and
• 4 per cent for properties costing more than £500,000.

So the proposal will benefit first-time buyers in what is currently the 1 per cent range. Let's hope the limits will be revised upwards in line with movements in house prices, but perhaps that's too much to ask. In any case, the Telegraph today reveals research indicating that house prices are are set to fall next year.

The proposal to raise the inheritance tax nil rate band is very welcome, and is something that has been argued for in the past here on this blog.

The Conservative Party leadership has committed itself (what were they thinking!) to Labour's spending plans for the first three years of a Conservative Government. This means that the tax cuts being proposed cannot be funded by a cut in spending, not even by a cut in wasteful spending - tax credits are overpaid by about £2bn a year, surely they could have targeted that. Rather the tax cuts will be funded by an annual levy of £25,000 on non-UK domiciled individuals, living in the UK, and currently enjoying favourable tax status.

I am happy with the plans - not ecstatic, but you can't have everything. I would have preferred for the taxes to be funded by savings identified through eliminating wasteful public spending. However, I appreciate that saying that would cause jitters up and down the land, as Labour would seize upon it to claim that the Conservatives would like to 'cut vital public services'. So I am happy. Let's just hope the green tax proposals are as just as sensible.