CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Report Disputes UK Mansion Tax Claims

Report Disputes UK Mansion Tax Claims

By Amanda Banks,, London

06 September 2013

An independent global real estate consultancy has published a report into proposals for a mansion tax in the UK, warning that one in ten properties defined as "mansions" would be one- and two-bedroom flats, and that to meet revenue targets the threshold would have to be lowered to as little as GBP1.25m.

The tax is supported by the opposition Labour Party and by the Liberal Democrats, who form the minority in the current coalition government. The two parties claim that a 1 percent levy on properties worth more than GBP2m would raise between GBP1.7bn and GBP2bn annually, before taking account of exempted properties.

However, research by Knight Frank suggests that this figure is over-optimistic, and that the number of properties worth more than GBP2m and their average values mean that only GBP1.3bn would be raised. To meet the GBP2bn revenue target, according to the company, the threshold would have to be reduced to GBP1.25m. This would more than double the number of properties liable to pay the levy, from 55,000 to 140,000.

Further, if the GBP2m threshold is not increased in line with inflation, properties currently valued at GBP540,000 would be affected by 2038.

Knight Frank also notes that neither party has so far decided on which properties would be exempt, but that one Labour MP had indicated that current exemptions for the Annual Tax on Enveloped Dwellings may serve as a guide. These exemptions include properties owned and used by charities or for social housing, as well as farmhouses and some business properties used to house employees, and properties rented to third parties.

The report adds that an exemption for heritage buildings – whose owners must by law maintain and protect their properties – would reduce revenue by nearly a quarter.

Revenue may also be lessened by homeowners dividing properties into less valuable units, and there may be further economic consequences as homeowners avoid making home improvements that add value to a property.

Knight Frank also highlights the plight of those who are cash-poor but equity-rich. The Liberal Democrats have suggested that for older people the tax could be deferred and paid from their estates after their death, but Knight Frank suggests that interest charges would create a "significant increase" in the overall charge over twenty years.

TAGS: tax | property tax | real-estate | United Kingdom | Investment | Property Investment | Invest | Investment

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »