The concept of a mansion tax has re-surfaced, this time as a proposed labour policy, having first been mooted by the Lib Dems in the 2010 General Election manifesto. The mechanics of such a tax might be complicated, here a just a few considerations:
- Depending on who you believe, give or take a 10% margin of error, there are 100,000 properties in the UK valued in excess of £2m. Around 80% are located in London and the south east
- A dwelling valued at £2m can range from a 2 bed apartment in London, to a country home, with acres of land, tennis court, swimming pool etc.
- Labour says the tax will contribute £1.2bn annually to the exchequer, which works out at £12,000 per property. However, it is proposed the charge be progressive so the most expensive properties will pay more than those valued at the entry level of £2m.
- The threshold would rise in line with house price inflation, meaning home owners beneath £2m would not be dragged in over time
- Cash poor / estate rich occupants might have the option of paying the charge from their estate when they die
- The biggest obstacle (General Election result aside) appears to be valuing properties, using valuation tax bands that date back a quarter of a century.
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