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Mansion Tax Mayhem!
Hampshire residents can breathe a sigh of relief as proposed Mansion Tax plans have been squashed. Last month saw the Liberal Democrats and Conservatives vote against the initiative…but how long until the issue is raised yet again? Here the Commercial Property Team look at the motives behind Mansion Tax, the impact this could have on the Hampshire community in the future, and when the issue could rear its head again.
The latest round of Mansion Tax proposals couldn’t have come at a worse time for residents in Hampshire, as it follows the disappointment caused by recent announcements regarding the cap on inheritance tax, which continues to have a disproportionate effect on the middle classes of Hampshire.
Whispers of a tax on homes worth over £2million have been growing since 2009 when the Lib Dems proposed the initiative as an attempt to improve our suffering economy, as it was speculated that the tax could raise an estimated £2billion. However, in reality it is more likely to be a punishment for those who have worked hard and been successful, and as Hampshire is a wealthy county it is our residents who will be most affected across theUK.
Many of the 70,000 people in theUK who own homes with a value of more than £2 million are retired, and most likely bought their houses more than a few decades ago. The tax, which will be raised annually, will be calculated at one per cent of the value of the home above £2 million.
While the Mansion Tax proposals are considered to be able to help our economy, it’s likely that they would actually drive these home owners overseas as they sell their heavily-taxed homes here and invest in property abroad. It will also be a hard tax to manage and administrate; the homes would have to re-valued each year, and the criteria effecting that valuation can differ tremendously due to external factors beyond the home owners control, such as new planning applications, anti-social neighbours, increase in local crime rate, to name a few.
The other concern is that if these proposals are approved in the future, and if it is successful, there is nothing to stop the threshold moving from homes worth over £2million, to those over £1million, and then maybe to those worth over £500,000, until every home owner is paying an extra tax on their home. An alternative to the Mansion Tax would be to re-evaluate and re-band Council Tax, which is currently based on 1991 prices; an adjustment that could bring the same results as the Mansion Tax, while making the Council Tax bands fairer to all home owners and not penalising a particular group of people.
Even though the Mansion Tax has been voted down for now, it is an initiative that does keep re-surfacing as a way of raising so called ‘easy money’, so it’s only a matter of time before this, or a similar initiative, is proposed again…and we’ll be here to keep you up-to-date!
If you’d like to know more about Mansion Tax proposals, or any other topic of Commercial Property Law, contact the team on 02380 717717.
This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.