'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?

Equity release, which frankly would be sensible planning anyway.

sell up and downsize.

Sorry, I do agree with your point but just to clarify that the 2% announced in the budget is on top of the existing tax rate for interest.

So you currently pay 45% of that interest to HMRC if you are a higher rate tax payer. Soon to go up to 47% with the budgetary increase.

Still, would be nice problem to have!

Never known a incoming Govt to scrap taxes that raise money.

You can bet your life that should Reform or Cons win the next GE, the removal of VAT on school fees will be an "aspiration" "when the economy allows"

My generation is despised but it’s just the truth. I’m done with trying to save and all the rest, I won’t have a standard of living anyway

I largely agree. Money has to be raised and I think this isn't unreasonable.
Presumably it can be deferred or a charge could be made against the value of the house?

There will be some edge cases of dirt poor elderly widows who bought a house in London in 1950 for 2p and a button and it is now worth £3m through no fault of their own, but you cannot allow edge cases to define a policy. Most people who own houses worth over £2m are objectively well off. And TBH even if you have little cash now - you own an asset that is worth millions so any tax bill can be settled when the house is sold.

Just release some equity. There are plenty of companies that will put cash up front and nothing will need to be repaid untill the house is sold

'Mansion tax' - what if you just can't pay it ?
what a delightful problem to have, never has a solution been easier (sell it)
Families ‘ existing’ in temporary, overcrowded mouldy. ‘Homes’ wish to have such an easy solution.
I know can be a bit whataboutary, but read the National mood

'Mansion tax' - what if you just can't pay it ?
what a delightful problem to have, never has a solution been easier (sell it)
Families ‘ existing’ in temporary, overcrowded mouldy. ‘Homes’ wish to have such an easy solution.
I know can be a bit whataboutary, but read the National mood

Lots of elderly people are in this position; my Granny was. If you can’t borrow money from relatives then you do an equity release for costs such as a new roof on the house.

She could take in a lodger. Carefully vetted, or course.

Having 2 million quid and claiming you are poor is ridiculous.

Equity release, deferred payment and simply selling the place are all possibilities.

There's always one! 🙄

Well if it is a good enough solution for people who cannot afford to buy or rent where they live and have connections and support .....

If you don't think local services need better funding, you haven't been on the sharp end of any SEND service recently.

Yay, more scaremongering. Just what's needed. Fact free posts from people wanting to whip up a frenzy.

Making it harder to save for retirement is a stupid idea. It will just store up problems for the future, and these changes make longer term financial planning harder.
The triple lock should either be applied to NMW as well as pensions, or be scrapped.
We have to Do Something to balance income and outgoings. A relatively modest mansion tax (given costs if heating and maintenance of a big building) will raise more money than it costs, and whilst it's awful for some of the people it impacts, a lot can easily afford it (given that they are choosing to forgo investment income on 2m).
Similar to taxing second homes - of course it is harsh for some cases, but in the majority of instances its part if the cost of luxurious property ownership.

Really? Are you sure about that?

Indeed- I think people only hear what they want to hear - personally if it’s that tight then draw down £80k on equity release - various options including just draw down as and when you need it ( like a bigger pre agreed overdraft) - I don’t see the issue

Surely she could downsize but still live in the same area, or are all the properties over 2 million

You get a lifetime mortgage to release some of the equity, will likely have to do this anyway for care costs etc at some point. All these elderly people sitting in big homes (which of course they are totally within their rights to do!) do not have to live an impoverished life, they can borrow gradually according to their needs against their house and then whatever mortgage they have built up will get settled when the estate is wound up.

This area is now very well regulated (unlike in the past with cowboy equity release schemes at mad rates) and it should be used by more people!

Aside from this, it can be deferred I believe, she won't have to pay it it can come out of her estate.

People who have £2m in equity but claim to be "too poor" to pay an extra £2500 dont get much sympathy from me

It shouldn't mean elderly people being pushed out of their homes. Those who probably scrimped and saved and went without, paid their taxes, they didnt expect to be taxed until the pips squeak in their twilight years. Its a spiteful nasty trick to play on people who have worked hard rather than sat on their arses with their hand out. And quite frankly some of the comments on this post are shameful 😡

Daily Mail sad faces incoming.