From The Evening Standard (page 29, 30 May 2014) or see here:
PENSIONERS should be able to protect the value of their property "nest egg" from inheritance tax if they downsize by moving to a smaller home, Boris Johnson believes.
THe Mayor's revised draft housing strategy contains plans to encourage people aged 65 or above to move into smaller properties to free up family homes for younger Londoners…
It came as Peter Wynne Rees, the homer chief planning offer in the City of London Corporation warned that the London housing market was being fueled by "dirty Russian money being laundered and Chinese gambling".
He told BBC London that new riverside developments in Pimlico and Vauxhall were merely "safety deposit boxes" for foreign investors and called for a "punitive tax" on empty properties.
As per usual, reducing the tax burden (including but not restricted to inheritance tax) on everything that isn't occupation of land (transactions in land are not occupation thereof, things like SDLT are bad taxes too) and collecting it as an annual tax on land values instead ticks all their boxes.
With an annual tax, the sooner an over-occupying pensioner trades down, the more tax he saves; if he downsizes sharpish, he (and his heirs) end up paying much less tax than he would have done if he'd stayed put; those pensioners who currently have real savings and live in more modest homes end up better off etc.
And where's the moral dividing line between "vacant" and "under-occupied"; or between "under-occupied" and "just right" or even "overcrowded"? Why not make the annual tax the same regardless of how many people live there; non- and under-occupiers will get lousy value for money and everybody else gets much better value for money, then market forces sort it out.
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