'Mansion tax' - what if you just can't pay it?

[shellinthesea]

My elderly mum lives in a London house worth about 2million. She's been there for over 50 years, and is physically and mentally fragile. There is no way she would EVER want to move, the house and her neighbours are her whole world. She has no spare money - at all. (Neither do I, before anyone suggests this!) How is she supposed to manage this? It's not exactly her fault that the value of the property increased so much since my parents bought it all that time ago.

I also have a friend, also in London. Both parents sadly died in an accident about 15 years ago, and she used her inheritance to buy a family home which has also increased massively in value. It's probably also worth over 2 million now! She's a single mum on a lower income with 3 kids who very happy at their local school and within their community - what's she supposed to do?

It's just not as simple as 'you live in a high-value house, you can obviously afford to pay several grand a year' as RR seems to think. And for anyone who is about to say 'oh tiny violin, their houses are worth two million' - both of these situations are complicated and quite sad in many ways. Neither my mum nor my friend can simply just sell up and move...anyone have any thoughts on this?

She could let out one of the wings of the house.

The extra tax would have come out of the estate so again it affects the beneficiaries, not the person in the house.

People need to be honest about their concerns for their own inheritances - not paint pictures of old people being forced from their homes.

Many are moving to Dubai etc. I couldn’t think of anything worse , but it is as popular as Spain was in the 70s!

Give it back to who?

Or she could pay it after her death or when the property is sold.

‘That wanker you couldn’t stand at school is living in Dubai’ should be the headline 🤣

Ah, but then OP and her siblings get less money…

I wonder how long it'll take the government to work out that they could apply property tax to all private homes.

How is she affording the running costs on what, even in London, must be a fairly large house, now?

You don’t pay council tax?

Single mother here.
worked hard for decades and brought up kids.
House worth over 2 mil - sold it this year to release equity, downsize and live a calmer life.
Most people who own a house over 2 million will have access to 2.5k pa certainly in London. There is always a way to raise this small amount of money if you have such an asset.

That makes more sense.

I also wonder how they value a house in a situation like the OP's.

Nobody is forcing anyone out of their home. There will be provision for the amount owing each year to accrue and then be taken out of the person's estate on death (Rachel Reeves said she was looking at this and details would be announced later). The OP's mum might not have bought a £2million house, but the reality is that the country is skint and the OP's mum is sitting on a big windfall for her heirs. The government needs a bit of that windfall to continue to function.

Well they can pay the £2500 then. Shit happens and whining and tantrums doesn’t help.

Following on from removal of non dom tax status and VAT on private school fees- this is yet another Labour tax policy that will cost more to implement than it raises in actual tax revenue.

So the OBR estimates that it will raise £400 million per year. There are 2.4 million houses in the UK that are in council tax bands f, g and h. The majority in f then g then h. These will all need to be revalued.

Let's assume that it will cost £500 per house for the initial valuation by the local authority. Let's also assume that 50% of those valuations are disputed by the home owners adding a further £500 cost per home.
Initial valuation
2.4 million x£500 = £1.2 billion
Appeals
1.2 million x £500 = £600 million
Total £1.8 billion in costs
Annual tax receipts assuming all
appeals are rejected (big assumption) = £400 million
Therefore it will take 4 and a half years
for this policy to start generating tax revenue.

But the Labour Party and their backbenchers won't care so long as it bashes the rich. Or it doesn't matter if the poor get poorer so long as the rich don't get richer.

Sorry but why SHOULD people be forced to leave homes that they love?

If they're going to do this, they have to make it so that it can be payable on sale/death. They can't just demand money from people.

with that (illogical) argument then surely nobody needs to pay council tax? Or insurance? Gas/electricity and other utilities? Or a mortgage? Maintenance and upkeep?

It has literally never been the case that once you buy a house that's it, you never need to spend a penny on it again.

Whether buying or renting, you can only live somewhere as long as you can afford to - and if you can't, whether that's because you lose your job/get divorced/interest rates go up/cost of heating a big house gets too high when e&g rates went up/ your ctax band gets re-evaluated, or, in this case, a new tax is introduced - doesn't matter what the reason is, you can't afford to pay, then you have to move.

Don't try to daily mail sad face "family home" emotionalise it 🙄 Every (occupied) house is someone's home.

There are people who have to move all the time because they can’t afford their house. People going through a divorce, redundancy, needing to leave work for care. There are also people who need to sell because they suffer a life changing illness or accident and their home isn’t suitable for them. Rarely is it fair but that’s the reality.

If your mum is sat on a £2m asset but literally has no spare money, I’m really surprised you weren’t already encouraging her to move.

Also, she didn’t purchase a £2m home but she’s aware of the cost of her home. She knows she’s elderly and is over the inheritance tax threshold. So you either add it to the sale of the property and take a bigger hit on IHT or she moves now, enjoys her retirement and hopefully you have a smaller inheritance tax to pay.

I came on to write that I felt it was an outrageous scheme and incredibly unfair to so very many people, but then I read this post and sadly, I fully agree. As a country, financially, we are utterly screwed. The money needs to come from somewhere, wherever it comes from It’s going to feel harsh and unfair to a population of people. It’s got to the point where I actually don’t know what the alternative is.

The obvious solution is to tax the rich, of course. But somehow they keep avoiding that and I don’t see that changing.

Not that long ago someone owning a £2million + house would be classed as ‘rich’. However what a £2million house looks like now is vastly different to what it looked like 10 years ago. You absolutely don’t have to be rich to own that now, particularly if you bought it a long time ago and the value has exponentially increased. Rich in property, yes, but not in actuality. It does seem incredibly unfair that someone who has lived in their home for years and years should have to move because of this, and let’s face it the move would likely be a long way away from not only their home, street, neighbours but also the whole community as a move to somewhere cheaper would likely mean that.

But the money has to come from somewhere 😢

It’s hard not to notice the level of bitterness and resentment that often surfaces in these discussions. Many homeowners, whether through luck, timing, or decades of hard work, now have equity in properties they bought long ago. They’ve raised families, put down roots, and contributed to the communities they live in. Yet there’s a growing chorus insisting they should simply move elsewhere because their homes have increased in value and they can “afford it.”
What’s striking is how differently we treat other groups in similar situations. When people seeking social housing express concern about being placed far from their families and support networks, the general consensus is that it’s unfair, they shouldn’t be expected to uproot their lives. And rightly so. But somehow, when it comes to long-term residents who own their homes, that same empathy evaporates. I’ve even seen comments along the lines of, “If they can’t afford it, they shouldn’t have it,” which is a standard we would never dream of applying to people on low incomes or social welfare.
It sometimes feels like the attitude is: “If I can’t have it, then neither should you.” That mindset helps no one. People who work hard, pay taxes, and contribute to society deserve to feel that their efforts amount to something not that they’ll be criticised or punished for any financial stability they’ve managed to build.
I’m not a high earner myself; I budget carefully like everyone else. But the way things are going, it’s becoming harder to see the incentive in striving for financial progress when the message seems to be that that if you work hard for financial gain, don't get above your station and think you deserve any more. It’s a frustrating place for the country to be in, and it’s worth asking whether the real issue is inequality or just resentment directed at the wrong people.

Why didn’t successive governments do something to stop houses going up by so much?
I know that sounds so simplistic and not easy to do, but it clearly favoured past governments to have such a rise in equity, probably so now they can cash in.

Again because shit happens. Plenty of people have to sell up and move. They lose their job, they suffer ill health and go into care. My mum has become unable to walk so needs to live in a flat despite her and my dad loving our old family home and garden. Obviously the OP is concerned about her own mum and we’d all feel the same but at a populiation level she’s nothing special.

Errrrrr what? People who can’t afford things can’t have them.

That's for services provided for someone else, ie the Council.
It's nothing to do with a tax which is simply levied on something you already own.

Are seriously comparing this to a mortgage? Or maintenance.

Surprised you can't see the difference.

Have they explained who values the houses and how often it would happen?

What happens if it turns out that a house was undervalued or over valued?