'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?

Understand that there are some sad situations, but most people who own a house over £2m would be able to release some equity from it if they're desperate to stay there. So actually, the "sadness" is more that the relatives who stand to inherit that house will inherit slightly less money when they sell it - which does take us into small violin territory, I'm afraid.

Has it been made clear if the tax will be based on the price paid, or an assessment of current value? I suspect price paid - as it would be an administrative minefield trying to argue current market value - so yet again, those wealthy pensioners who reliably show up at the voting booth will be protected. Phew.

(Said as the recent owner of a £2m+ house on a street of Boomers who bought their homes for £400k in the 90s! Still - it's the right policy and I would happily vote for it).

It's disgusting.
Why should anyone or any law make a person leave their home?
Your mother owns her home and pays rates. She has also contributed to taxes and to her community for years.

Vulnerable people will be putting themselves in danger and taking in lodgers when they possibly can not judge who is a safe option.

The increasing population can not be sustained without destroying natural environmental habitats and altering enjoyable long term beneficial cultural ways of life.

Governments need to cease out of control migration and offer incentives for people to move out of homes that are too big: carrots not sticks!

Sweet Jesus.

because those who planned to buy 2m property will now start looking at 1.5m (once this tax is introduced, there is only one direction of travel).

those who wanted to buy 1.5m will be priced out and start looking at 1.3m
and so on

But Labour will certainly run out of other peoples money soon and will say that 1.5m is a mansion now

rinse and repeat

yes, breeding, very much so

https://www.mirror.co.uk/news/politics/skint-pregnant-mum-four-budget-36309267?int_source=breaking-news

I personally know some cases like this

Have you read any of the debate?

There is no suggestion whatsoever people will be forced to move out of their homes. People with 2 million pounds of equity in their house have options which do not involve moving house but do involve reductions in inheritance for their beneficiaries.

Many many people in this country, including some elderly people, do not have these options at all and are absolutely forced by circumstances to sell up and it can be heartbreaking and happens everyday. It’s not the case here.

@nearlylovemyusername why are you talking about child benefit? Do you understand what you are arguing about?

The houses will be valued at less than £2m until such time as most properties will cost that much anyway. There are new builds near me that start off at over £1m anyway. They just will not increase in value - yet.

If you bought a house built centuries ago, it could easily be worth £2m now. Some period properties where I live are worth more than that.

What people are buying is privacy, and living near people of equal status to them. The really rich will suck it up. Pensioners who have lived in the same house for donkey's years will probably be unable to make repairs or keep warm. Those houses will deteriorate very quickly and the value will go down fast.

Look around the country at the number of great houses falling into ruin.

What maddens me is that the local Council collects it but has to give it to the Treasury.

It helps no one.

It sounds unfair for OP’s mum to have to sell
up, but you could equally say it’s unfair that I work hard and earn a decent salary but have no hope of buying a house. At least OP’s mum has enjoyed the benefit of it for a long time, and will make a fortune from it when sold.

Lots of other people have to move to cut their cloth: my grandmother had to move when she retired, from the modest 3-bed council house she’d lived in for 50 years, because she could only afford the rent on a 1-bed council flat on her state pension. She didn’t have an option though, even though I’m sure she would have loved to stay in her house. Having to sell up a £2m house after enjoying it for a long time is not a tragedy. It was what older people always did before the postwar era of mass homeownership and huge house price rises. Young people and families need houses too.

We all understand resources are finite, yes? So we have to make choices. It's about putting things on a scale and asking which is worse.

So - one side of scale: Wealthy old lady needs to release some equity to continue to live in her £2m+ home. Her kids will therefore inherit slightly less when they sell her home. Or if they'd hoped to live in the home, they might have to sell it and become millionaires overnight instead (if they're not already). But perhaps it's not exactly what they all wanted. So that's on one side of the scale.

Other side of scale: Kids below the poverty line - kids in the UK who are struggling to concentrate in school because they are hungry; families losing their home because they cannot pay their mortgage / rent and don't have the option of equity release on a £2m house; NHS on its actual fucking knees; woefully underfunded police service. I could go on and on and on.

Some decisions aren't actually that tough. People have paid in all their lives - yes - but they've also benefited hugely: from rising house prices, functioning NHS, free university education (in fact, with grants!)... Why is it such a taboo to suggest that they should now be expected to give something back? Even if it hurts a little? Why are some generations exempt from the squeeze?

Labour MPs celebrate end of two-child benefit cap in Reeves’s budget | Budget 2025 | The Guardian

OP's mum tax will go to payments to families like the one I posted earlier

Your mum could split her house into an upper and lower flat. She retains downstairs and doesn’t have to move.

I agree with everything you’ve said except she wouldn’t have to sell up at all. £2 million in equity gives you plenty of options. Her children would just inherit a bit less.

@nearlylovemyusername the post of yours I replied to said CB. Child benefit & the benefit cap are different things.

Why do you think the tax raised by this policy is not funding pensioner benefits & only going towards dc?

It is unnecessary. This tax really benefits no one. It is probably more costly to collect than it is worth. She thinks there are a lot of houses just under £2m and there probably are, because that is fast becoming the norm in some places, especially of gated estates. They are already in the highest band.

If she really wanted to tax the rich it should be on homes worth far more than that. £2m really is not so much now. Think of the £800K the ex deputy PM paid for her small flat in Hove. There are studio flats in London costing over £1m.

The most dangerous aspect about Ms Reeves is that she is really telling people who have small incomes - and it also depends on what you spend your money on, in the end - and that is causing rising resentment. All we have had from her in the past 14 months is that there are enough rich people to pay those on lower income, as though those on higher income did not come by it by honest toil.

Is she starting a class war, where none exist except in her mind, similar to that in the age of Downton Abbey, say the 1920s, the time it ended?

Is she widening the ''them and us'' gap? Why would she do that if not to stir up resentment?

Is there a reason she cannot release equity from her home, to pay the tax each year and enable her to stay there?

she really wanted to tax the rich it should be on homes worth far more than that. £2m really is not so much now

There really aren’t lots of 2m homes. Taxing the global elite is a different ball game.

YAB unbelievably unreasonable. Your mum is a millionaire. She needs to pay her fair share.

No empathy here.

How about this....

I run a micro business. I get caught up in IR35 nonsense when it wasn't meant to capture my type of work cos I regularly move from contract with one client to another. When I get caught up in it, I have to engage a specified umbrella company (£100pcm) whilst keeping my Ltd Co going at a cost of £2500pcm. Everything the client pays is assumed salary. I pay employers and employee costs, even having to pay apprenticeship levy which applies to companies that have a turnover many many times the turnover of my micro business. I do not get sick pay or holiday pay, I do not get pension contributions, that has to come out of what the client is paying me under IR35 rules. Anyways, those stoppage mean I take home less than 50% of what the client pays - the last time I was engaged inside IR35 I had a few pay slips where I learnt less than 40% of the payment I received.

And on top of that, I have downtime between contracts. I'm coming to the end of 2 months of no work as I was onboarding and no ones paying me for that time - I had to find a lot more than the measly amount your mum is being asked to contribute. And after April 2028 I won't be able to pay more than £2k pa into my own pension because it's classed as salary sacrifice. Small business is bearing the brunt of the Tories mismanagement of the country.

But you know what? I think this budget is fair.

Noone can argue that taking kids out if poverty is a bad thing.

I advocate that

• those on benefits who can work should be made to work not in conventional jobs but in jobs that help society - providing support at a citizens advice bureau which is all voluntary work, helping out at a church or providing company to people in homes or even acting as an admin function that can be brought in to reduce backlogs in government departs/local authorities.
• millionaires estates should be taxed

So @shellinthesea stop moaning and work out how your mum is going to pay her fair share like the rest of us do. It's not rocket science, she's sitting on a heck of a lot of equity.

This.

Many houses will slip below the threshold, but we are not going to fund defence, schools, NHS etc. by taxing elderly people in large homes who probably in many cases can"t even pay!

https://www.thisismoney.co.uk/money/mortgageshome/article-15320507/Spike-London-homes-valued-banks-Rachel-Reeves-plots-new-mansion-tax.html

Because it is their home? Why should they move because a government wants to pretend to be hard on "rich people" with a daft slogan tax while hammering all the things that poorer people use (bookies, pubs, cigarettes/tobacco, sugary snacks, milkshakes, SME"s etc.)

I’m sorry, but this thread is driving me bonkers. Post after post points out that she can presumably release equity so she can stay there, but those arguing against the tax just don’t seem to acknowledge that bit?

It makes me wonder if the real issue is people who have waited all their lives for an inheritance feeling butt-hurt that when it finally comes, it might be a bit smaller.

People are very quick to suggest poor people or homeless people do whatever they have to do.‘get a job’ or ‘move to somewhere cheaper’ or ‘live within your means’, ‘don’t have kids if you can’t afford them’. This applies here. I don’t see why that shouldn’t be the case for those more fortunate too!

Agree!

Although all they have to do is release a tiny percentage of equity and then they can stay exactly where they are. It won’t impact them at all beyond doing some admin. That’s the thing about sitting on wealth - it insulates you and keeps you safe.