Lib Dems plan 500pc council tax increase on second homes

Lib Dem leader Sir Ed Davey visits Thorpe Park after launching the party's 2024 general election manifesto on Monday
Lib Dem leader Sir Ed Davey visits Thorpe Park after launching the party's 2024 general election manifesto on Monday - Lucy North/PA Wire

The Lib Dems have pledged to allow local authorities to raise council tax on second homes by 500 per cent.

In its 2024 general election manifesto, launched on Monday, the party vowed to give town halls new powers to carry out a tax raid on second home owners and use the funds raised for more affordable homes.

Under the Lib Dems’ plans, local authorities would be able to increase council tax on properties bought as second homes by up to 500 per cent. The party would also bring in a stamp duty surcharge for overseas buyers and create a new “planning class” for the properties.

Elsewhere, the Lib Dems pledged to recognise non-binary identities in law and remove the requirement for trans people to produce medical reports when changing their gender.

And in a surprise announcement, the party said it would more than double capital gains tax for top earners in order to fund a £5 billion-a-year rescue package for the NHS, increasing the highest rate from 24 per cent to 45 per cent.

In their 116-page manifesto, centred on health and social care, the Lib Dems pledged to deliver a “fair deal” for British people.

In addition to their commitments on Europe, gender recognition and capital gains, they vowed to tax frequent fliers on international trips, reverse Tory tax cuts for “big banks”, and get “big money” out of politics with a cap on donations to political parties.

The Institute for Fiscal Studies (IFS) think tank said there were “clear risks” that the Lib Dems’ tax plans would not raise the necessary funds.

IFS director Paul Johnson said: “By focusing on taxing banks, energy companies and tech giants, many of these tax rises are intended to look ‘victimless’ – but of course they are not.

“We are already raising more from taxing companies than at any time in decades. Moreover, there are clear risks that their package of tax measures would not raise the £27 billion a year that they claim.

“And some of the tax raising measures are an economically bad idea.”

Meanwhile, Richard Holden the Conservative Party chairman, said that any vote for the Liberal Democrats was “a vote to put Sir Keir Starmer in Downing Street”.

Here, The Telegraph takes a look at some of the party’s key policies.

Lib Dems leader Ed Davey at the official launch of the party's 2024 manifesto 'For A Fair Deal' in London on June 10
Sir Ed Davey at the launch of the 2024 manifesto - BENJAMIN CREMEL/AFP via Getty Images

Housing

The Lib Dem manifesto states that the party would give local authorities new powers to “control second homes and short-term lets” in their areas by “allowing them to increase council tax by up to 500 per cent where homes are being bought as second homes”.

There would also be “a stamp duty surcharge on overseas residents purchasing such properties”.

And the party said it would create “a new planning class” for second homes – but did not provide any further detail on what this would involve.

A Lib Dem spokesman said the idea was to raise funds for local services and deliver affordable homes for families with lower incomes.

“This is about giving councils the power to ask second home owners to pay a fair contribution towards vital public services which are currently at risk. It’s up to councils if they would use this power, according to local need,” they told The Telegraph.

“Under the Conservatives, we have seen an erosion in the number of properties that are available and affordable for locals, including teachers, nurses and carers, and once vibrant communities have been turned into ghost towns. People in rural communities feel ignored and abandoned.

“The Liberal Democrats would provide councils in areas with high second-home ownership with a fair and effective way of raising funds which could be ring-fenced to fund key local services and deliver affordable homes for lower income families.”

Europe

While the word “Brexit” is not mentioned once in the Lib Dem manifesto, eagle-eyed journalists were quick to spot a reference to rejoining the EU buried at the back of the document.

As part of a four-step plan to “fix the UK’s broken relationship with Europe”, the party pledged to seek to rejoin the single market once “ties of trust and friendship” with the bloc have been renewed.

The Lib Dems added that their “longer-term objective” is for Britain to rejoin the EU itself.

Launching his party’s plan for power on Monday, leader Sir Ed Davey said he believed the UK needed to be “back at the heart of Europe”.

He told reporters: “We have made clear time and again that we are a pro-European party who believe that our country’s interests are best served by working with other countries in the mutual benefit… we believe in the long term we need to be back at the heart of Europe.

“But we are being really clear that we are not going to pretend that is going to be easy. Regrettably the Conservative Party have so poisoned Britain’s relationship with our nearest neighbours, our allies, they have undermined trust and when I speak to European politicians, regrettably they don’t trust the United Kingdom anymore, and how sad is that?”

Gender

The Lib Dems have pledged to recognise non-binary identities in law and remove the requirement for trans people to produce medical reports when changing their gender.

The party said it would respect and defend the rights of people of “all sexual orientations and gender identities, including trans and non-binary people”.

The manifesto states that the Lib Dems will: “Reform the gender recognition process to remove the requirement for medical reports, recognise non-binary identities in law, and remove the spousal veto.”

The party also said it would require large employers to monitor and publish data on gender, ethnicity, disability and LGBT+ employment levels, pay gaps and progression, and publish five-year aspirational diversity targets.

And it would ban “all forms of conversion therapies and practices”.

Taxes

There is only a brief reference to capital gains tax in the manifesto itself, with the Lib Dems vowing to “fairly” reform the levy to “close loopholes exploited by the super wealthy”.

But the plans were fleshed out in a separate article for the party’s website.

Under the Lib Dems’ proposals, the highest rate of capital gains tax would increase from 24 per cent to 45 per cent.

As a result, a higher earner making a £110,000 profit from a house sale would pay £47,250 in tax, compared to £25,680 under the existing rules.

The Lib Dems said the money raised from the tax rises would fund a £5 billion-a-year rescue package for the NHS by 2028-29, including 8,000 more GPs.

Meanwhile, the party would increase the digital services tax on social media firms and other tech giants from 2 per cent to 6 per cent.

It would introduce a 4 per cent tax on the share buyback schemes of FTSE-100 listed companies, to “incentivise productive investment, job creation and economic growth”.

And it would reverse Tory tax cuts for “big banks” by restoring the bank surcharge and bank levy revenues to 2016 levels in real terms.

Health

On health, the Lib Dem manifesto promises everyone in England “the right to see a GP within seven days, or within 24 hours if they urgently need to, with 8,000 more GPs to deliver on it”.

The announcement was trailed by the party in advance of the manifesto launch as part of a £9.4 billion package for the NHS and social care in England, paid for by increasing taxes for banks and closing finance loopholes used by the super-rich.

The Liberal Democrats also want to guarantee access to NHS dentistry for those in need of urgent care, and they promise to implement the recommendations of the UK Infected Blood Inquiry in full, including “full and fair compensation to all victims of the scandal in a timely and transparent manner”.

Transport

The Lib Dems would shift the tax burden on international flights towards frequent fliers, while cutting costs for “ordinary households” who take “one or two” return trips per year.

As part of a series of pledges on aviation, the party also vowed to bring in a new “super” tax on private jet flights, while removing the VAT exemptions for private, first-class and business-class flights.

Companies would be compelled to compare the carbon emissions from a flight with the equivalent rail option when customers book their journeys.

And airport expansions could be blocked until “a national capacity and emissions management framework is in place”.

Environment

Sewage is the Lib Dems’ headline pledge from their Natural Environment manifesto chapter.

It reads: “We will end the sewage scandal by transforming water companies into public benefit companies, banning bonuses for water bosses until discharges and leaks end, and replacing Ofwat with a tough new regulator with powers to prevent sewage dumps.”

Central to the party’s plan is its pledge to introduce legally binding targets to prevent sewage dumping into bathing waters and highly sensitive nature sites by 2030.