to think mansion tax is an unfair tax on London and the South East?

[goodnessgracious]

I disagree with mansion tax but regardless it seems to me to be unfair on Londoners.

Aibu to think that it may also force some people to sell their properties who are income poor but property rich?

A lot of working poor people feel the same as Green. Look at the rise of UKIP! Seriously Green is not on her own.

It does the working poor no good to be taxed heavily through VAT, NI and come tax and have to claim "handouts" to live. It is not good having unlimited immigration of unskilled people.

I suppose it's unlikely that greengrow would employ a gardener with that username. If she is able to keep her money then she has the choice.

I think very wealthy people could pay more tax. But I also think benefits should be limited to whatever the minimum wage would be for say a 40 hour week.

i think a lot of people would agree with Green grow and the disability thing is possible.

The German economy isn't comparable to the uk economy. Germany still has a huge manufacturing economy at 25% of GDP whereas the manufacturing contribution to uk GDP is just over 10%. This makes a huge difference because the uk economy is much more reliant on the services sector (approx 80%) and the financial services sector in particular. Those jobs are v transferable in a global economy hence a proposal like mansion tax or in particular 50% tax rate has a disproportionate impact on the uk economy when compared to Germany.

What tax do I think is fair for all - something between 20% and 33% (combined NI and income tax). On disabilities most countries people support their own families rather than have a socialist state do so. If my children were or become disabled I would support them.

However I have not said I am against the welfare state - just the size it has got an the cost to all tax payers. I have said as taxes have risen and if there is a new £12k a year mansion tax that could be tipping point and mean those who work hard and are paid a lot stop working so hard or pay less tax and the poor suffer. I remember my berother stopping working at weekends (he's a doctor) in terms of extra work when the state was taking about half what he earned. That was the tipping point and time with his family might as well take precedence. If tax is too high people work less and less tax is generated or they exploit tax loopholes - I don't ciontribute to a pension unlike many a dirty little tax avoider on mumsnet. Other mumsnetters will have assets in their name as the lowoer earning spouse transferred from the husband . All kind of tax avoidance tricks which are lawful which the rest of us might start doing if mansion tax comes in. if the state loses the goodwill and buy in to the welfare state of people like I am then the state ends up receiving less money and has shot itself in the foot.

The Tory plan to increase the point at which you pay 40% tax is a very good move for example.

if you read the FT it has been full of support for taxes on capital rather than taxes on income by the way. I don't agree but lots of people make the case for asset confiscation which we already do at 40% on death for those who don't plan.

The worst thing of all is that the Tories and Labour have no good plans to ensure we stop spending a lot more than we get in as a country. It is a total mess. You couldn't run a family like that.

People seem to be having this a lot of contradictory ways...

The very rich should be taxed less because they contribute more...

Or

People in 2 million pound houses aren't rich, they just live in expensive houses which they bought when prices were lower (not sure about the claim teachers and nurses were buying 400k houses 12 years ago unless theyhad a much higher earning partner or a nice hefty nest egg...) If these people want to move they have won the lottery, essentially, gaining mlions by doing nothing - is this fair? (As the OP was about fairness) but if they stay put they are not rich... Although they undoubtedly have bigger houses or more luxuriously appointed ones than anyone else.

The cry of "not fair" is what rankles - why should they have to sell up (at a massive profit) and move and commute - but why should anyone?

Life, and money, and housing, are "not fair" for a lot of people. This tax may indeed be I'll thought out, but a lot of people who currently have things better than most crying that any theoretical threat to their very comfortable position is "not fair" just sounds spoilt and petulant - though of course nobody else in the same position is going to look at it that way.

I don't think that contradicts. I think the rich pay more than their fair share at present. Secondly I think some people in £2m homes with £1.9m mortgages are not rich and are being taxed on a £2m they don't have. Believing both those views is not contradictory.

The post above mentions massive profit. What about people like I am and many others - the younger ones - who have no massive profit at all - just a huge mortgage who cannot move because under the 2014 new lending rules will not get mortgages (okay we could move into rented flats) but it is still capital confiscation of capital we do not have or else a forced move when people bought houses on one basis and the rules change after they have purchased.

The third argument is piss people who pay most of the tax off and less tax is gathered which damages the poor so it's a bit of a short sighted method.

Watched this being debated on the wright stuff last week and found myself agreeing that it's definitely wrong if you live in an area of London or the SE where you bought the property when it was a rough area for a relatively small amount and now it's worth millions because the area has been developed.

An elderly lady phoned in, she had bought a house in an area of London that was a slum area years ago when she bought it for a small amount. Now it was worth 2 million so she'd be affected by this but she was just a lone pensioner, not well off by any stretch of the imagination and her house was the only thing she had of any value. How is it fair she should be taxed? Likewise someone who inherited their house from a relative, they themselves aren't rich at all and were thrilled at the notion of essentially a free house but now they're hit with a tax they can't afford. Not everyone who has a million+ house is well off... Granted most probably are but not everyone. IMO it'd have to be means tested based on their income.

I agree althiough I feel sorrier for young couples with a mortgage of almost £2m and no savings than for an OAP who has £2m of equity as clearly the latter has a load of money - the equity in the house - whereas the newer buyer may only b e worth £100k and that may have been borrowed from parents.

Its more than just 'not fair' that people are complaining about though mrtumbles - this tax won't achieve its professed aims (to save the NHS), it will only give those with a 'screw the rich' attitude a sense of satisfaction. Many people who genuinely don't have the cash will be caught while a huge number of truly wealthy people will escape it by virtue of having their wealth invested in different or multiple smaller assets. Others will find loopholes (applying to convert one house into two flats, using tax avoidance measures to cut down their exposure elsewhere as Greengrow says). A significant number of people affected will find the cash by

• cutting spending on luxuries such as cleaners, childcare, gardeners, restaurants, grooming - yes boo hoo for the homeowners, but even more so for the people providing these services;

• others won't be able to find the cash by cutting down as above and they will move - that will be their 'punishment' for ending up in an expensive house. But they will still take the proceeds from that house when they move and spend it on more space outside London - thereby impacting on the communities and property market in those outside areas.

In addition, it is expected that the distortion the bands will cause in the property market will result in less stamp duty being collected, cancelling out much of the funds raised by the mansion tax..along with people with properties just under the £2m mark avoiding renovations etc so as not to increase the value of the property (so less work for builders). It's a joke.

I hadn't realised the sale of land isn't taxed, no stamp duty etc.

My friend is looking for a house with about 10 acres to keep her horses. What happens is they advertise the house for sale "with x acres by separate negotiation".

This is basically a cunning plan to bring the price of the house down below the stamp duty limit.

I can understand for land that's actually being worked, but for someone to keep their ponies on?

If you try to sell your house and garden separately to keep both under particular stamp duty bands they may be classed as linked by HMRC:-

"SDLT for linked purchases or transfers

There are some situations when two or more property transactions that involve the same buyer and seller are treated as being 'linked' for Stamp Duty Land Tax (SDLT) purposes. People connected to a buyer or seller can count as being the same buyer or seller. If two or more transactions are treated as linked then the buyer must pay any SDLT due on the total value of all the linked transactions. This may mean that they have to pay a higher rate of SDLT than if the transactions had been treated individually.
..

For example, if a residential property was sold in such a way that Mrs Smith purchased the house but her husband Mr Smith bought the garden, the two transactions would be linked. This is because Mr and Mrs Smith are connected people and they're buying things from the same seller as part of a single deal..
00

For example, a property speculator might agree to buy three new houses from a builder. The builder offers a special price for the houses because the speculator agrees in advance to buy three. It's agreed that the buyer will pay £180,000 for each house once it's complete.

In this example, the three transactions are linked as part of a series. So SDLT is payable on the total chargeable consideration of the three transactions - £540,000. The buyer pays SDLT at 4 per cent on £540,000, which is £21,600. If each individual transaction has a different effective date, a separate SDLT return will be needed for each. "

The people who have inherited a free house or who are sitting in a 2 million pound house they only use a couple of rooms of and in which they have 2 million pounds of pure capital are exactly the people who should contribute if "fairness" is what we are looking for though, surely! They have that asset through pure luck - there is a fairness to luck going both ways, and nobody is throwing them out on the street (with their unearnt millions, in those cases).

The tax may be counterproductive, but its no less fair than having an asset worth 2 million through inheritance or luck of the housing market vastly inflating the value and leaving you with vast sums of equity.

Some of the other arguments are more convincing - but not fair?

The scenario I can't get my head round is where:

Person A owns a £2 million house with a £1.5 million mortgage and loads of cheap furniture etc. Total assets £500,000.

His neighbour lives in a £1.75 million house with no mortgage. He/she owns a Hockney and a Modigliani valued at £2 million. Total assets £3,750,000.

The mansion tax means that person A should make the bigger contribution to saving the NHS/reducing the deficit. Arbitrary.

houses are an attractive item to tax because they are very difficult to hide.

Hence we have council tax, which is banded according to value, except for multi-million homes; but not wealth tax which would include your Hockney or my platinum bars.

I don't wish to get drawn into the complexities of this potential tax or how it will/won't be implemented
However:

Why is it ok for some posters to say tough shit, those whose properties will be affected should just move
when if the same argument is applied to council tenants being moved to other areas or told move to manchester or give up your social housing, we are all meant to have immense sympathy?
You're still talking about people with feelings, networks, communities they love etc. Just because they may appear to have money - because many of them are not rich, they happen to own a property in a city that has seen unparalleled property price increases - does not mean they don't have feelings about their home and where they love living. There are many shitty areas in London where houses are now worth 2mil+, and lots of them are occupied by old people. Should we be booting them out too or making them sign away part of their asset in order to pay for this tax?

I suspect even if Labour do get in it may well be quite a while before it is in place given the difficulties there will be with it.
I agree with Piglet that the reason houses are picked is they are hard to hide. It is as simple as that although unfair on those of us with no savings who happen just to have a house which may well be heavily mortgaged as we are being taxed on an asset we don't own in the sense that we have a loan on it.

Anyone who has inherited a huge house has paid the state an absolutely massive 40% inheritance tax on it so I don't see why they have to be taxed yet again year by year on simply owning it.

It is hard to apply fairness to tax generally and life - eg some of us are born with a high IQ or genes to give u big breasts and that's pretty random but we don't slap a higher tax on me because of the bigger brain or chest even though it is unfair someone has that and someone else does not except to the extent that the bigger breasts ones probably get the richer men who in their turn pay higher taxes and the bigger brained ones might get better jobs and pay more income tax I suppose.

The mansion tax will be particularly unfair so let's just hope it doesn't come in. If it does I shall start doing the lawful tax avoidance so many other people do like pension contributions to ensure the state does not get more money from me than it does now.

Greengrow, ... A young couple with a mortgage if 2 million, do people like that exist? How would a young couple get such a big mortgage?

My daughter and her husband owe £1m. That is not £2m but shows it is not impossible. Also me post divorce I owed £1.3m. I didn't mean young as in 21 but youngish compared to the 75 year old with the unmortgaged Hampstead house.

Exactly ladyrabbit, people being forced to sell investment properties or assets such as cars or art to satisfy a wealth tax is one thing, being forced to move out of a family home is a different proposition entirely. At least introduce it on properties changing hands at £2m+ from hereonin, then people can make the judgement before they take on a mortgage and buy a property that would carry the tax. That at least would remove the retrospective (and therefore unfair aspect ) of it.

It's not unfair.

Firstly, if you have a £2 million asset then you are very rich. If you have a small salary but live in an expensive house you can sell the house and buy something for £1.5 million. Plenty of poor people have to sell their homes or move all the time, why should rich people be any different? The money can also be taken out of their estate when they die or they can do an equity extraction.

Secondly, most people who live in £2 million+ homes have not done anything to earn this wealth, they were just born at the right time and benefitted from house prices rises.

Why is it better to tax someone who actually works and earns £20k at 20% tax but not expect someone whose house has earned hundreds of thousands in unearned value not to pay 1% or whatever small percentage of the value that they have benefitted from? It is better to tax unearned wealth than to tax work as this discourages work and encourages speculation and "get rich quick" schemes.

It doesn't matter if it is a tax on London since London benefits greatly from all these rich people already.

good idea sleep .

the other problem is that they need to review the threshold and raise levels periodically as they never do with stamp duty.

plus there are some wealthy property owners in other parts of the uk who may have more money in the bank but house is worth less than SE.

Although as described the mansion tax sounds poorly thought through, something needs to be done to ensure Londoners pay their share of property taxes.

Currently in most parts of the country, council tax is a much bigger burden. On a £200 per month flat in the valleys council tax would be over £800 per year so approx another third.

On a £216,667 per month property in Westminster, council tax would be £1300 so an extra 0.05%.

ghostland, I know a family where the mother built a business over more than ten years from scratch, eventually employing 300+ people, years of minimal salary, sometimes no salary at all in difficult patches to keep the company afloat. Never drew a salary of >£150k and only that in the final two years before selling the company about a year ago. Took the proceeds and put almost all of it into a house which will probably be subject to the mansion tax. So she took a risk, worked incredibly hard and dealt with the stress of running a business all that time. Paid tax on the proceeds of the sale of business, now has sufficient income from a new start up business to live fairly well on but not to pay £15k a year after tax. Wouldn't get a mortgage to cover it either....so - no 'unearned income' there. How exactly does that fit with your argument and how does it incentivise anyone to go through the same tough process of building a business?

ghostland who are you to decide whether people have done anything to earn their wealth or not?! A lot of what you would consider rich people have worked incredibly hard and made smart decisions to enable them to service mortgages on properties that now happen - by dint of the anomalous London property market - to be worth a particular sum. Why set an arbitrary value at which people should be penalised? Why not introduce a property tax on EVERY property with the percentage being adjusted according to value? Or will it just make you happy seeing 'rich' people being punished?

I just wish people would stop peddling this myth that all rich people are somehow evil and have scammed somebody or something in order to accumulate their wealth. It is a lazy assumption and makes being financially successful seem like some dodgy alchemy that is beyond the reach of the average person. I'm not for one minute saying that being rich is the be all and end all, but we get nowhere as a society by perpetuating these us and them arguments.

It all helpfully masks the larger problem which is successive governments cooking the books and frittering tax monies away on bizarre government initiatives and shit like Trident.