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UK Labour Party Fleshes Out Mansion Tax Plans

by Robert Lee,, London

22 October 2014

Owners of properties worth more than GBP2m (USD2.5m) would pay a "mansion tax" of at least GBP250 a month, if Labour forms the next UK Government, Shadow Chancellor Ed Balls has said.

Writing in London's Evening Standard newspaper, Balls said that if Labour wins the 2015 general election, it will introduce a new tax on "prime value properties" worth more than GBP2m in today's prices. "More modest" properties would not be brought within the scope of the tax.

According to Balls, the tax would be progressive: "We will ensure those owning properties worth GBP2m-GBP3m will only pay an extra GBP250 a month through this new tax – the same as the average top band of council tax. Owners and investors in properties worth tens of millions of pounds should make a much bigger contribution. And we will also look at asking overseas owners of second homes in the UK to make a larger contribution than people living in their only home."

The lower threshold would track property price changes, rather than inflation, he told the paper.

Ball said: "If prime property prices continue rising then by the time the tax is introduced the starting point will be higher than GBP2m." He added that Labour would also seek to protect "the small minority of people who are asset-rich but cash-poor." Long-standing residents living in high-value homes who do not pay the higher (40 percent) rate of income tax would be guaranteed the right to defer the charge until they sell their property.

The tax would operate on a banded system, and owners would be able to submit a self-valuation to HM Revenue and Customs (HMRC).

TAGS: compliance | tax | tax compliance | property tax | United Kingdom | tax thresholds | tax rates | HM Revenue and Customs (HMRC) | tax reform | HM Revenue and Customs (HMRC)

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