Mansion Tax at £1.5m - what will this mean?

[MaureenOHara]

Does anyone have any idea what this might mean for an individual and what it might do to the market. What happened to the £2m market and will that be replicated or is it different?

Why would delivering local services in an area be determined by property values? Does collecting dustbins or paving roads cost multiples more because houses are more expensive? House values are used for Council tax because they are compared to other house values in the same locality, so will be roughly proportionate as a simplified method of dividing up local costs. The house prices in a different area hundreds of miles away under a different local administration are no more relevant to this than the house prices in Australia or Brazil.

Explain something to me, please.

Let’s take Llloyds Bank - they have a UK residential mortgage book of approx 300bn GBP. Their lending criteria is premised on a LTV of say 60% average.

Now, say property values become further depressed owing to Labours latest wheeze. That means, logically Lloyds mortgage book needs to be revalued - and their LTV rises.

What is Lloyds going to do? Well, its going to increase rate margins (in an already tightening monetary environment), and it will cut lending and/or increase required deposit ratios.

How is that good for potential borrowers, and how is that good for the broader housing market?

It's a funny thing about tax. I hardly use the NHS, the Education system, police, or courts, yet I help pay for them. My house has never burned down yet I chip in for firefighters. I even help pay for sexual health clinics.

I don't need long term care. I don't often use the Library. I haven't got Covid but I helped provide business loans.

I have got some money and I don't begrudge paying some tax. It's much better than the alternative.

Tax is the admission ticket you pay for living in a civilised society.

Agreed.

Some law firms will position themselves to specialise in challenging valuations. There will be some serious fights.

An HMRC valuer coming to your property? I can see things turning nasty.

Are you in line for the extra mansion tax?

I think they are testing but won’t actually lower to that amount, 2m is far more palatable to the majority

Labour are being ridiculous precious about their manifesto, as if people with half a brain can't see through their back door methods. Its entirely reasonable to alter manifesto promises due to shifting economic conditions so why don't they stop tinkering around the edges to raise bugger all and just put a penny on income tax. That's the only way they are going to raise anything meaningful

As pp said, a better idea would be to have additional council tax bands for all parts of England.

I really don’t want to pay more income tax

I agree. But there would be uproar.

It’s the first time in history, I believe, that a Government is (allegedly) considering lowering the threshold for a tax before even implementing the original version! That shows the extent of the extremity of economic management and lack of any coherent, long term industrial strategy or economic plan. They lurch from crisis to crisis with no reflection on why the fiscal position is deteriorating further each time, at a far faster rate than in other countries impacted by the same geopolitical issues, none of whom have implemented such extreme increases in tax and yet are not constantly having their fiscal position decline so fast they keep losing all fiscal headroom again by the following year. Even the fact that both Haldane and O’Neill - who were allies of Burnham - refused to join his Government because they knew how economically damaging his proposed policies were going to be, and are now so concerned they are being publicly critical of him and openly explaining their warnings to the media, doesn’t seem to have deterred these ideologists from their insistence on economic destruction.

That would be better than this insane proposal, yes. But what would be better is if these incompetents realised that they cannot tax their way to growth and that growth is the only way to fix the UK economy, so it would be better to stop implementing policies which they have been told in advance will reduce growth and actually start to govern competently.

I think that's wishful thinking to be honest.

They don't care about palatable, they need to get money from anywhere at the moment so nothing is off the table. The majority that vote for Labour won't be in this bracket so it will be a vote winner for them. Tax the rich plays well with the masses.

Personally I think this will be introduced in 2028 and will be lowered to £1M probably once the initial process has been established.

Other countries have this system so it's not without precedent.

No one does but equally everyone wants better (or even functioning) public services FOR ALL . The Labour back benchers won't tolerate any benefit changes so they needs to do something! - tinkering around the edges for small potatoes will do nothing.

I don’t think it’s true that it’s only targeting people who already pay a lot of tax. The vast majority of housing wealth is owned by over 60s & much of it is simply equity gains.

It’s especially ridiculous given they broke their manifesto pledges in their very first budget.

@Pluto46the cliff edges already discourage my family eg I have stayed p/t

That's an interesting point. How many of Lloyds houses will pay more tax?

And how many of them have a 100% LTV?

If the answer is, approximately fuck all, how much will the average Lloyds shareholder care?

Of course I don’t begrudge paying some tax.

Bur when some people end up paying for everything and those who pay someone are fewer and fewer then we have a problem.

Poll tax is fairer, but the current redistribution will of course be favoured by the current government, and the ones who benefit from it will vote fir them.

It impacts older people and look at the furore over means testing winter fuel.

Older people will be able to defer payment until they sell the property. As long as their income is below the required threshold.

Most older people are living below the poverty line. The minority who are poor and living in £1.5M will be able to defer.

This argument won't stop this policy.

I don’t have an issue with paying tax but the burden is too weighted on income and disproportionately on younger people. The frozen bands introduced by the Tories have really done a number on us & Im annoyed Labour won’t raise them.

If you earned 50k 5 yrs ago you need to be on 65k now just to keep pace with inflation.

And 60k today is equivalent to 30k in the early 00s but for many wages have stagnated.

It’s Pat McFadden’s line - every meeting is who can we tax to pay more in benefits.

@HareBreweryI just don’t think they will do 1.5m, maybe 1.8 or similar. We will have to wait & see.

If it were lowered to £1m there would be loads of houses in London Labour voting constituencies that would be affected. Loads.