'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?

Maybe not, but that's the point of debate, no? To listen to ideas and find out which are feasible. It is true that corporations like Amazon and Meta woefully underpay tax in the UK. Tax that could – or should – be ploughed back into public services.

It’s one of the best things we’ve ever done. It will make her life easier, she doesn’t have to move far away from neighbours.

Sorry, but with the country in the state it’s in (has been for years), everyone has to contribute. If she’s physically and mentally frail, staying alone in a large family house isn’t beneficial.

But there's a specific deferral scheme for properties that have squared in value that were bought some time ago so if it's deferred it won't effect your mother much at all. It will effect your inheritance, is that what you are really concerned about?

Then why don’t they just increase inheritance tax.? This seems a costly, administrative burden when you could just change the IT thresholds?

Everyone doesn't contribute though. Which is part of the problem.

Its a stealth increase in IHT. I bet they've done it because IHT is the most unpopular tax.

Why is taxing unearned wealth the politics of envy but dragging more people into higher tax bands & taking more out of their wages not?

Let’s say it again:

2 million is a vast amount of wealth by anyone’s standards, and whilst it is tied up in a property that is still real wealth that brings with it huge advantages and options.

Being asked to contribute something like 0.12% of that wealth per year is a drop in the ocean

The illiquidity of property is an inconvenience for paying the tax, but is easily overcome by equity release of deferring payment. No one is being turfed out of their home (and the number of edge cases of people living in £2m homes who are not in fact also wealthy by other means will be tiny as a proportion of the overall number of people affected by this).

HTH.

Why can’t she pay it by releasing equity? Why is everyone pretending she’d have to move?

This is exactly the sort of wealth tax we need. And I say this as someone who will be paying it - so not sure who I’m envious of…?

It was one example based on the description OP gave of her mothers property, she said its a 3 bed with the smallest bedroom a very small box room. Which is what I found

Im sure there are similar properties of that price in other areas of London, it was quick RM scout to find what OP had described.

@Cantthinkofafunnyusername14 you can’t tax global cooperations without global initiatives. And even though they don’t pay their fair share they do contribute to the economy creating jobs etc.

Because that would affect everyone, not just the owners of £2 million + properties.

Both are in my view.

Because some don’t, no-one should?

How do you suggest we pay for public services? Or do you think they shouldn’t exist?

No. Im not saying that. You said everyone needed to contribute. Im saying not everyone does. Which is not fair.

I thought Labour were supposed to be all about fairness?

This policy is only £400m if that. And not for a while. It’s not even enough for the NHS for a day.

The vast amount of tax hike is from tax bands as you say. This is a distraction so people won’t notice that.

@soupyspoon it doesn’t change the fact that it doesn’t represent all 2m houses in London. It’s still only a small % of homes impacted.

No. Im not saying that. You said everyone needed to contribute. Im saying not everyone does. Which is not fair

But taxing property does pull more people into the net.

Central government is also providing services for you (and the country as a whole), just as your local council is.

Central government is levying a small additional fee to help pay for the provision of those services, the size of which is calculated based on the value of each individual’s house (below £2m no additional fee required, £2m-£2.5m and addition £2.5k per annum required etc).

Why do you think there is a fundamental difference (changing the whole nature of property ownership!!) between the council charging you based on property value and central government charging you based on property value?

Yes thats a problem.

One good thing i've seen is getting the long term unemployed into work, basically paying the employer to take them on, then in many cases, they are taken on.
In a specific case, a young man unemployed for 2 years is now working FT, loving it and saving for driving lessons.

These schemes need extending but in the short term, requires money.

The no cost - to the employer - apprenticeships should help too.

If taxing 2m plus houses goes towards funding things like this, whats not to like.

Exactly this

As I said Im not strongly against it, but its a bit of a 'meh', it wont deliver anything substantial and is just an ideological, optics thing

It wont lift children out of poverty as so many posters here have posited, it wont improve the NHS, it wont support homeless people or supply affordable housing vfor those that need to rent. It wont bring down house prices really

The other thing on this thread is the insistence that people can defer the payments. I said so myself but wondering also about examples people are giving about people just having bought the house, say last year, lets say they're a couple in their 30s, young kids, are they allowed to defer the payments? And if so for how long, until their kids are grown up and they sell the house? Lets say for 10-15 years they stay in that property? So they're just sitting there racking up deferred payments all that time? Presumably to avoid this, there needs to be a means testing of income, so the elderly widow who is scraping by, would meet the income test for deferment and the young couple wouldnt. But who is paying for the means testing, this costs money and time and resources, where is the threshold for income assessment.

And then of course the valuation issue, who values the house?

Seems ill thought through

Secondly the number of suggestions on here for her to get a lodger!! Lol. Firstly the house has to be in a fit state to do that, while not falling down my own parents house wouldnt be able to take someone in, they are very elderly and frail, refuse to have a cleaner and unfortunately the house is in a bit of state. Also although another poster gives an example of their 80ish mum having a student in, that works for her, I know again my own parents would find that incredibly unsettling, intrusive, confusing, may act inappropriately. OP describes her mother as unwell, frail, no doubt she may be very confused and distressed by someone else living in her house. Not that its necessary of course but the suggestions really show that some posters have no idea about how it is to get old, confused, forgetful, slow, frail.

I think this policy will never come in to be honest

This is targeting a much more specific type of wealth than inheritance tax though isn't it? Much on which inheritance tax is paid will already have been subject to income tax or other forms of taxation. Property over the last 50+ years has gained extraordinary amounts of wealth for people for literally no effort. Isn't this just a means of creating revenue from that?

Then it’s sale and downside time then. Lots of people don’t want to downsize. In the same way lots of people don’t want to be stuck in rented forever and / or being over-crowded. Plus schools, NHS, criminal justice etc being under funded and no one wanting to pay for them

Private property slopes not belong to the state. You shouldnt have to.pay rent to stay in your own house. Its a bad tax.