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The possibility of a mansion tax being introduced in the UK has not disappeared despite many in the industry believing that recent changes to Stamp Duty would rule out the need for it. The shadow chancellor Ed Balls has confirmed that the annual tax on homes worth more than £2 million would be introduced in Labour’s first budget if it win the May 2015 general election. The plan would mean that the Treasury would start collecting the money in the 2015/2016 financial year. People with homes worth between £2 million and £3 million would pay about £3,000 a year. Those in more expensive homes would pay more. He claimed that Treasury officials were working on the proposals, in line with the civil service’s normal practice of making plans to implement the policies of parties that could win the general election. The Labour party plans to use the money to boost the National Health Service. ‘I would like to see that revenue coming in in the first year of a Labour government, before the end of the financial year,’ Balls added. This is despite a general feeling that the changes introduced in early December to make the Stamp Duty tax more even would mean there would be no need for the so called mansion tax. Alex Newall, managing director at Hanover Private Office, had been among those who believed that reform to stamp duty would replace any need for a mansion tax which has been widely criticised as grossly unfair. He pointed out that the tax would be a blow to families who, by no fault of their own, have ended up owning houses which have risen in value and gone above £2 million. ‘In London, this may only be a two bedroom flat, where house prices have risen over 20% in the last year,’ he said. He also explained that sales volumes in the prime market in London have already fallen due to fears over a mansion tax being introduced. ‘Notting Hill has seen a decline of 48% in transaction volumes over the last 12 months following the fears of a mansion tax as people worry about the annual costs,’ he said. He added that while increasing stamp duty will make it more expensive to buy a house at the top of the market, he believes that the wide majority of existing owners will favour this approach. ‘Compare taxes in London to those in New York City, and London will still remain a global draw. Security, education, business, a completely multi-cultural society, and despite operating a tighter tax system, it is in fact one which is now more in line with other global cities, such as Hong Kong where stamp duty is as high as 8.5% and in Singapore where it reaches 15% for foreign buyers or 10% for Singapore buyers acquiring a second home,’ he said. Winkworth estate agents believes that the revival of talk of a mansion tax will hit sales in… Continue reading →

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