'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?

This. It's an utterly immoral tax.

I hope your mum will be able defer for as long as she keeps her home, if she really cannot pay, or until she dies.

Your friend did acquire her home through sad circumstances, but - and I am not saying this lightly - people cope. As PP said, she could invest the proceeds from the sale of a £2M house and rent something pretty nice, even in London. Or she could buy something more average.

Millions of DC cope with new schools every year. It may not be ideal but this aspect of the family’s life really doesn’t sound like a tragedy, at least from what you have described.

I agree with Paul Johnson, former director of the IFS, that we really need to revalue council taxes and we should have a national CT scale. But the country is in a bad way (and no, not just because of 16 months of Labour policies) and this is part of a small move in the right direction.

Yep, agree
friend on the low income living in 2 million pound property ??
claiming UC ?? Anything else ??
sell up
irresponsible to sit on assets and take from the state ….

we are all nodding when we hear of plans to strip assets from benefit taking immigrants -

it’s only fair to tax payers

Means test all benefits?

Everybody wants the country’s finances sorted out but nobody wants it to affect them

Did you read the post?

The pension should be means tested or even abolished. I’m admonished all the time on this website for my “poor choices” in not owning a home at 26. So let’s extend that same energy to the pensioners who didn’t bother to save.

I agree that’s it’s ludicrous to have someone living in a £2m house claiming benefits (which presumably a lower earning single parent is doing). I do have sympathy for elderly people who’ve lived in a house for decades though.

As always, the Tories act like twats, Labour get in for one term, try to pay the bills, they get all the blame. Then the Tories get in again.

Round and round and we get poorer as a country. Brexit, covid, all the shit the Tories did, now Labour have to try to plug the hole and get blamed by EVERYONE.

The lodger idea isn’t awful. I have a lodger because my mortgage went up £400 and I couldn’t afford it. I want to keep my house so I got the lodger to make up the short fall I had to pay the mortgage/ bills. (I’m still skint). The lodger pays £650 per month. It’s an adjustment but me and my son like having her around. She is actually a really nice lady.

The state pension is a contributory based system so should not be means tested. As for the comment “pensioners who didn’t bother to save”, good grief. Some pensioners worked hard but couldn’t afford to save. Why do these discussions always turn into a slanging match against different generations?

No. You pay national insurance in order to qualify, but it’s not based on your contributions.

why is it that I face abuse any time I mention my financial situation, but pensioners who never saved are treated with kid gloves? The fact of it is the pension is bankrupting this nation.

People with 2 million in the bank will also be paying 2 per cent extra tax on that saving - so assuming 4 per cent return at the moment, 80k income plus an extra two per cent. Dividends also 2 per cent extra and second properties. So any extra wealth is being targeted.
If you own a 2 million pound house, you are wealthy, no matter how you spin it.

I want to argue against this, but it's extremely difficult.

If you are struggling for money, then sitting in £2m house is ridiculous.

Agreed.

I know - it does feel more unacceptable-
but elderly people sell up to pay for their care -
what’s different ?

our society generally subscribes to the notion of use your assets -
it’s not fair to tax payers to sit on personal assets and take from the public purse ….

I think people should get a grip about mansion tax. For properties worth 2-2.5M the tax will be 2.5k a year from April 2028. While it obviously will negatively impact some individuals, it's not the worst problem in the world to have. Lots of other people in society also suffer from having to pay high taxation in one form or another but tax is a necessary evil if we want good public services.

Old people don't have the automatic right to carry on living in hugely expensive houses for life if they can't afford the associated costs.

This tax will encourage some older people living in properties worth around 2M or more to downsize before the tax becomes a problem for them. And that's not a bad thing, in my opinion. If they don't want to downsize they at least have other options such as getting a lodger or using equity release.

I think it is to re-balance the fact that Londoners pay disproportionately low council tax compared to the regions. Your mum has benefited from that for years. It is obviously a rubbish situation for it to be fixed in such an acute drastic way, rather than incrementally correcting, and you and your mum have all my sympathies for that - it sounds stressful. But it does need to be corrected. I also think the being able to postpone the payments till the sale sounds like it fixes the problem - what is your problem with that?

How about trying to solve the institutional laziness and to stop throwing good money at bad practice. Health needs privatising to an extent and in reality so does education.

Its not as simple as telling an older person to just move. People in their 80s and 90s are possibly becoming frail and may need the support networks they have built up over the years. Not just physical support but also emotional support. Once you have found a suitable new home moving house is expensive and stressful. The new home may been to be adapted and future proofed requiring extensive rennovations. And unless they are first time buyers at the time of purchase they are going to be hit by ripoff stamp duty. If you can put off paying the mansion tax until you die and your estate pays that seems a sensible move.

I think the biggest change is the pension salary sacrifice. For someone in their mid 40s who was going to start saving aggressively into their pension once the kids are fully educated this is bad news. But I always knew we might have to do a stint in Dubai or similar, so be it. I think we are just going to have to do it if we want any quality of life once we are old. Saving via ISA alone out of salary long term is not going to get us a pension. We cannot rely on house price inflation anymore either. I have no idea how they think the younger generation will ever have a pension.

Health and education need privatising so that people in 2.5 million houses don't have to pay more tax? Ummmmmmmm no.

I'm not opposed to the mansion tax in principle but a house isn't just a house, it's someone's home. It might be in a place where all their friends and neighbours are, their whole community and support system. In some places like London even a once modest home might now be worth millions but it doesn't mean the person who lives their is rich, does that also mean they should have to sell up and move to a place they know nobody, especially if they are elderly and lived in a certain area all their lives.

It very much is a contributory based system. “The State pension is a contributory benefit based on the payment of National Insurance contributions.”

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim76160

The problem with the state pension is that people are living longer. It was all very predictable. Pensioners planned their retirement around it, being told they would receive the state pension, so you can’t just say “oh sorry you can’t have it after all”.