AIBU to think a £2m homeowner should pay mansion tax?

[LadyJos]

Anyone read the Telegraph Article about the 93 year-old man paying mansion tax on his £2m Richmond Home he bought for £15,000? AIBU but isn't £15,000 to £2m a fairly good return over 60 years, and shouldn't he pay some tax at the end? I can't help thinking since the home is mortgage-free, he has options here to pay the £2500 a year...
‘I’m a 91-year-old veteran about to be dragged into mansion tax. This is wrong’
www.telegraph.co.uk/money/property/house-prices/91-year-old-about-dragged-into-mansion-tax/

No they just want to help you spend it.

They are happy yo
do it for you, because for some reason what is yours is theirs, but what is theirs is not yours.

Simple, really

You are surely joking?

😂😂😂

Of course they’re not. It’s a factually correct statement.

That house has more internal space than any house I can find currently on the market in the 1990s Bristol suburb I grew up in. It's about four times as big as the house I'm in now!

Sorry, no sympathy. There are young people in London who are paying a fortune in rent for a pokey little room in a grotty houseshare. I'll save my sympathy for them.

If you had a £2 million house in my area it would literally be a mansion but £2 million in London could just be a normal terraced house so I don’t think mansion tax is fair when you are not living in said mansion.

We should do something to stop non-permanent residents from buying property in the UK. If you don't at least have indefinite leave to remain then you'll have to rent. There are far too many investment properties being left empty by Russian oligarchs, pushing up housing costs for everyone.

On the childcare issues, it is relatively recent. However, my prediction is that if it is heavily subsidised for 95% and not the 5%. What exactly do people think will happen in rich cities? The 5% will only send their DCs to select nurseries that will then feed into private schools. Why would anyone be subsidising others on top of subsidising others via taxes already? Excluding a small percentage of children and their parents is basically discrimination and disincentivising them from having children or a career in the first place.
I am not personally interested in this as my DC are much older but as two earners in that bracket on the highest marginal tax rates we would have been mightily annoyed about it. In our days, nursery in London was £50 a day with extras, it is now more than double that in some parts.

But that's partly because so much of our progressive (as opposed to VAT) taxes are based on income alone. So people on high(ish) incomes who likely already have a lot of outgoings (family, expensive mortgages, childcare etc etc) will continue to pay a lot in tax. Banded income tax is fairer than expecting people on 25k to pay the same as someone on 100k but can be a problem because it can discourage people from working longer etc. there are other ways of taxing that might be fairer- including taxing land. Which is what the mansion tax is. It's nothing to do with high earners or the 100k cliff edge.

Incidentally it's funny because someone earlier referred to social housing tenants in the "top 20% of income" and I pointed out that was anyone earning over 60,000. But got jumped on and told that actually 60,000 is very much "high income". When we talk about the (very real) tax cliff edge though, 100,000 is an ordinary person's income. I don't think it's hypocrisy so much as a sign we don't have a collective idea of what high income/very high income/ordinary income looks like. That makes discussions around tax quite fraught. I do think that people in the top 20 percent of income pay a lot in tax, but I wouldn't deem them super rich. The super rich are people in the top 1% of income or people who aren't "high salary" at all but have massive amounts in investments. They are probably under taxed. But to rectify that we would need to shift from only taxing income to taxing other assets more. Including land/housing. But that will also pull in people like the man in the article who will say he is being punished (it should be possible to help those people by for example deferring their tax until they sell. But even when that happens people still complain)

So in the absence of changing how we tax, the people on high incomes who aren't super rich will continue to shoulder a disproportionate amount of the tax burden. Apparently while lobbying furiously against any change.

@Valpolichella To have received a bill of £300k (as an example) in stamp duty, the purchased price of a house is £3.25million.

That is significant wealth in anyone’s book. That’s not top 1%, you’re way out of that league.

I didn’t question how you spent your money, I just made it clear that levelling ‘envy’ at everyone not in your position ignores valid arguments on wealth and who should pay more.

Anyway, I happen to think SDLT needs abolishing, a yearly charge makes much more sense. Proportional property tax of .48% annually is a win for everyone, pretty much. You’d have to live in your house for 20 years to get to what you’ve just paid in stamp.

I agree with this but it would be politically very difficult. People that DO live in the UK often have investments in London themselves and they would want house prices to continue rising. Maybe the man in the article doesn't care about that he just wants a home to live, but plenty of people do want their 2 million to keep growing. That includes some politicians, political figures, newspaper owners media magnates. So the backlash against it would be much angrier than the backlash against the mansion tax we are discussing here. And, of course, there are plenty of British political figures (Oakshot or Dyson) who themselves live abroad in Dubai etc but own properties here. Would there be an exception for British citizens who aren't resident?

If these people want their £2 million to keep growing they can invest it in something other than property. It’s egregious how many London properties have been bought for investment and nobody’s spent a single night in them.

Yes it is!
But even people spending time in their London investments would also be mad because maybe one day they want to sell it to a Russian or Chinese investor. There will be Tales Of Doom from the usual suspects.
I agree it should happen,.I also think taxes like the mansion tax or replacing stamp duty with land tax could help with the problem because.if you need to pay a small amount each year you have more incentive to make an empty property work for you by living in it or renting it out. But then you run into the hypothetical victims like the people who the man in the article worries won't be able to pay (he is clear he personally can pay the tax) or the poster from earlier who lives in a 1.6 million house but is very low income and if she was in the same circumstances but lived closer to the park she would be doomed etc etc.
So we go on with high house prices punishing the young and income taxes hurting the working high earners.

This makes no sense! We have an average sized 4 bed house with a very big garden, how can we be using more public services?

In which case, you must have a lot more disposable income that many. Certainly me who lives in a house worth nearly £2m in Richmond....

It's the blanket assumption that expensive house = disposable income. It really REALLY doesn't. Especially in Richmond and other parts of the South East. Being penalised because you worked hard, made sacrifices (we went without holidays for many years), considered the number of children you could afford to have, finally bought a house, saw the value of the house increase (pure luck) and chose to stay in your house for any number of reasons (mine is emotional/sentimental) only to be told that you now need to subsidise people who didn't do any of those things, is a slap in the face and just another example of squeezed middle having to dig down the back of the sofa whilst the REALLY rich do fuck all to support our society.

1800 sq ft is not a big house at all, do you live in an attic or something? Our 4 bed house is 2440 sq ft and is a long way away from being huge.

Ah ok, I mean a 1000 sw ft flat in prime Chelsea is 2 million…..

1800 square ft is 180 sq/m, which is already quite a big footprint, if it’s all useable.

Yes, because the actual rich are proper mobile. Before anyone comes after me, a lot of people are leaving/have left……..

How does it work then if someone moved last year and paid 100k stamp duty? Should there be a carve out for 20 years for them?

I am not in any “league”. And I disagree with the validity of your arguments. I am a willing net contributor by a very, very wide margin and I do not agree that I haven’t paid and continue to pay, my “fair share”.

What I want to know is whether the “20 years worth of tax” I paid upfront, again from already higher rate taxed income, will count against this new tax. I suspect not which I do not think is reasonable or fair.
Similarly, I do not think it is reasonable or fair to expect a 90 yr old man to pay this additional tax. He doesn’t actually have £2m in the bank, it’s his home. Why should he be taxed additionally on sensible financial decisions? If he had frittered it all away on high days and holidays, he would pay nothing. Instead, he’s been responsible but is charged for the privilege.
The state will get its share when he dies. The entire system needs a massive overhaul but I cannot see that any political party has the will to do it. But, we cannot keep ignoring the issues we have with expenditure whilst simultaneously going back to the same people for more and more.

Didn’t you say you inherited your house? It was a gift, surely?

It’s not beyond imagination that there could be a 5 year amnesty for anyone paying stamp duty in the last 5 years, or some other accommodation.
However 20 years? Unlikely.

But as people pointed out you aren't being penalised.
The man in the article isn't being penalised either because as has been pointed out repeatedly, if he couldn't afford the bill he could defer it till he sold the house which would mean he gets less money from selling the house, but since he just wants to live there shouldn't bother him. They did take into account that expensive house doesn't always=high income.

Taxes like the mansion tax are aimed at the very very rich. They have mechanisms built in to ensure that very rare anomalies (people living in 2 million homes by chance/location who aren't super rich) aren't hurt.

100 k stamp duty and mansion tax post 5 years, is on the face of it terribly unfair, punitive and illogical

An amount of £15,000 in 1960 would be worth approximately £448,417.50 in 2026.

I’ve just googled the worth of £15k in today’s money. One of the problems is you want to tax inflation.

At the moment, people are allowed to make a property gain on one property - most people don’t own more than one house. If the gain on property was taxed on sale, people probably wouldn’t be able to move house.

A smallish sized family house should not be deemed a mansion, even if it is worth £2m+. Maybe along with regional spending plans, we should have regional taxation plans. In some parts of the UK we could call houses at £200k mansions. If not why not? Maybe we should tax the amount of land used instead?

I do think IHT should be more widespread - less allowances. CGT needs to allow for inflation and it currently doesn’t. There are lots of anomalies with tax that need sorting out to make taxation fairer. Everyone should pay tax - but it needs to be spread amongst everyone.