'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?

Fucking brilliant 👏🏻 …. Sad but true. Sorry OP

I did read it! Of course they can all move, if there's no other option.

2 million invested in a bank account at 4 per cent is 80000 a year. So sell and rent? Or sell and buy something smaller very close by? It is such a huge sum of money.

exactly, how can anyone claim to be poor when they have an asset worth £2million?!

Council will take you to court to get there money one way or the other.

Cant exactly feel sorry for someone sitting in a 2mil pound house.

It will be a charge on the house till the house is sold or the occupier dies. Even in London £2m buys a big house.

The details haven’t been decided yet. This is in the official Budget document

“At the Budget, the government is asking those owning the highest-value properties to contribute more. The government is introducing a High Value Council Tax Surcharge (HVCTS) in England for residential properties worth £2 million or more, from April 2028. This charge will be based on updated valuations to identify properties above the threshold and will be in addition to existing Council Tax. Fewer than 1% of properties will be in scope of HVCTS. New charges start at £2,500 per year, rising to £7,500 per year for properties valued above £5 million, and will be levied on property owners rather than occupiers. Local authorities will collect this revenue on behalf of central government and will be fully compensated for the additional costs of administering this new tax. Revenue will be used to support funding for local services, with further consideration through the next spending review in 2027. The government will consult on detailed implementation of the HVCTS in the new year, including to determine who might need additional support to pay the charge and how to deliver it.”

It’s not due to be implemented for another 2.5 years, by which time everything may have changed again as we will be approaching a general election.

Going to be a lot of people panicking about missing out on inheritance from their boomer parents with this tax.

Not everyone choses to live in a £2million house, but they do financially benefit from it.

If the upset is about having to move from a lovely home where memories are made, then taking the money out of the property after the person passes is a perfect solution?

Ain’t that the truth 🤣

I can kind of see why it would be a challenge for an older person to move but the example of the single mum on a low income is ridiculous. If you own a £2million house you're pretty much set up for life. There is no reason she could not move.

I dont see how your friend's situation is particularly complicated or sad, either.

Millions of people can't afford to live exactly where they want. People have to sell their home and downgrade/move elsewhere because they can't afford it every year.

Obviously losing her parents at a young age was sad but by the age she is at now many people will have lost their parents, and few of those will have had huge inheritances. Imagine losing your parents AND still having to worry about how to put food on the table and a roof over your kid's heads, not just in your preferred and clearly very desirable location but anywhere.

I refuse to believe that there are no cheaper houses in her local area than 2 million! Even if she downgrades to a million or 1.5mil house (the horror!) where the kids can keep going to the same school, she will still be better off than at least 95% of the country.

If the house is too expensive to maintain, then it should be sold.

Pretty simple.

I mean there's plenty of people in the UK having to do things they dont want to do because they are in financial difficulties.

Not everyone has a £2million asset though.

Limited sympathy required.

I would have thought this was obvious anyway.

Man there's some properly sticking the boot in posters on here atm. Attacking the disabled yesterday, attacking the elderly today.

Some people really need to get laid.

You mum could take out one of these mortgages where you don't pay anything until you die and they take their money from selling the house afterwards. Not sure they are very good value, but worth looking at if she could do with a bit more available cash to live on too.

Could your friend re-mortgage? Take out enough to pay the mortgage for a few years and a bit for spending money. Then either pay it off or sell the house when the children are older.

With a big asset there are usually some options although they may not be what you would want ideally.

Why? As long as you don't use the cowboys it's a very sensible option for some people.

I don’t think we should avoid taxing assets purely because people don’t have ready cash. I hope they allow the elderly to defer the cost until death.

It's scheduled to come in mid 2028. We will have another election by mid 2029 and I doubt at this rate labour will get back in. So might be for a year only, and she has 2 years to prepare for it and figure out a plan.

The extra council tax from this proposal is estimated at £400m per year. That sum will not sort out the NHS or prison service. In any case, it’s not going to fund those things. They’ve announced that the “Revenue will be used to support funding for local services”.

“Going to be a lot of people panicking about missing out on inheritance from their boomer parents with this tax.”

Why? Surely a lot will move as they will be too stingy to pay 2.5k extra tax, freeing up money which they will probably distribute to their kids, and save on inheritance tax by doing it potentially (if they live for long enough). Inheritance tax is capped at 1 million. In many ways, this may actually cost the taxpayer as people are incentivised to move sooner rather than later.

Exactly this

Yes. Definitely targeting London. The slums of the north would never cost £2million, even if you included their flat caps and whippets in the valuation.

🙄 Maybe get out a bit more?

Banks will offer equity release products specifically for mansion tax.

A 2m house is a 2m house. Either you could afford to buy it and can pay the tax, or its unearned wealth and you should be taxed on it.

It that cash is then very limited in how it’ll grow. Property will continue to increase in value b