General Election 2015

[Simster]

No, you pay tax on the value banding of your house and only the owner / tenant pays. So for example, take two houses of equal value within the same council boundary - one has 2 adults living in it and one has 4 adults. Both would pay the same yet the second house could effectively use twice as much council resource.

Debateable. It doesn't cost twice as much to empty a bin for a house of 4 people over the one with 2 in it.

I think some sort of hybrid council tax/poll tax set up would be fairest. One where the incremental cost of each additional member of the household is smaller and smaller, and the total tax reaches a maximum number of people, maybe 5 or 6.

 

[Pavilionaire]

Here are the reasons I think the mansion tax is a bad idea:

1. Every property would need to be valued. This is a subjective process and, no doubt, findings will be contested, making it labour-intensive. There will be appeals aplenty.
2. Property prices have historically fluctuated significantly.
3. A good number of people who are outside the Self-Assessment system will be brought into it, i.e. pensioners whose pension income is taxed at source will have to file Returns annually. A lot of these people are not "tax savvy" and won't have a clue.
4. Back-taxes payable on death for those on lower incomes - a logistical nightmare for the grieving family to contend with, and pressure to sell the property quickly, no doubt.
5. Many of these mansions will be broken up into smaller units / flats in advance of the introduction of the mansion tax - not brilliant if you're rich looking for a big family house in the south-east.
6. Minor point, but in practice properties at / around £2 -£2.5 million will be hard to sell - who is going to want to pay £2 million on the nose and be hit for mansion tax when you can pay £1.9 mill and avoid it? That should make for some interesting bunching in the marketplace.

I think the government could "save" the £1.2 billion by making the collection of taxes more efficient. There's a massive gap between tax due and tax paid - it IS coming down albeit slowly, but the Office of Tax Simplification need to do so much more.

 

[Tubby Mondays]

that said, do you think it is right to tax people based on where they chose to live couple of decades ago?

Is it any worse than turfing people out of their homes that they have lived in for a couple of decades as a punishment for the failure of consecutive governments to build enough affordable housing?

 

[West Hoathly Seagull]

A question for the accountants on NSC: Suppose I own a £2 million mansion. Has the law been changed to prevent me setting up WHS Property Ltd, registering it in the Bahamas, transferring the property and renting it back off it? I know Capital Gains Tax can sometimes be liable if you transfer a property, say from a Trust to a Limited Company. In addition, managing agents are required to set up accounts to ensure landlords based abroad pay tax on the income from their properties, but that is on income, not capital.

 

[Tubby Mondays]

No, you pay tax on the value banding of your house and only the owner / tenant pays. So for example, take two houses of equal value within the same council boundary - one has 2 adults living in it and one has 4 adults. Both would pay the same yet the second house could effectively use twice as much council resource.

And when were the bandings reviewed? They haven't been. Theyre 20 odd years out of date.

 

[beorhthelm]

No, I'm saying you dodn't make half the fuss when Tory flawed policies are made - ridiculous child benefit changes for example:

i have a stalker so i dont like inheritance in principle, and i think the child credit change was daft too, better served by including in general income assessment. hardly supportive. if I'm more vociferous on this tax is because a) i was in the mood and b) its even more flawed.

Fairness doesn't come into it. There is clearly a hole that needs to be plugged. If no mansion tax, what's the alternative? Personally I think there might be something to be said for introducing a property tax of sorts. You can't hide a building, and perhaps it is redress for those who pay a whacking great tax on their earnings but still struggle to keep their heads above water.

im not sure what you think the "hole" is, general budget or perception that someone isn't paying as much as they could? the alternative to the former might be to reduce spending (difficult for us all to accept). the mansion tax *is* a property tax of sorts, one that starts at an arbitrary value point. I've read arguments for property tax in principle, but unless the land is rented/leased/used (i.e. farmed) i cant see that it can be justified on the basis of value, with no view of the household income.

i don't see how any form of property tax offers any redress to those paying tax on the earnings, and struggling to keep afloat, when they happen to be in a £2m home. so i'm left with the confused conclusion that you agree that its not right, but have brought into the tax for some reason.

alternatives might address why there are so many £2m homes concentrated London/SE. best idea ive heard this week on this is from Diane Abbott (against mansion tax...apologist?), who suggests a council tax reduction for properties around new social developments, to address objections. incentivise development, a novel idea.

 

[Herr Tubthumper]

No, you pay tax on the value banding of your house and only the owner / tenant pays. So for example, take two houses of equal value within the same council boundary - one has 2 adults living in it and one has 4 adults. Both would pay the same yet the second house could effectively use twice as much council resource.

But I remember I once received a big discount as I lived on my own, and when I moved out I paid zero as the house was empty.

 

[Herr Tubthumper]

And when were the bandings reviewed? They haven't been. Theyre 20 odd years out of date.

In general they don't need to be reviewed. It's the ratio between different properties which is the key element and by and large this doesn't change does it?

 

[Westdene Seagull]

And when were the bandings reviewed? They haven't been. Theyre 20 odd years out of date.

Agreed - which shows what a crap system council tax is.

 

[beorhthelm]

In general they don't need to be reviewed. It's the ratio between different properties which is the key element and by and large this doesn't change does it?

agree! i think its quite odd every time they use the cost of re-banding as an objection to extending council tax bands at the top end. generally a property on a street is going to be the same relative value to the other, and this is going to be the same difference relative to another street as it was in 1990. the actual reason they dont want to do this is that council tax goes to the local authority, not to the treasury, so there's not a lot of appetite for it in central office. of course one could suggest its ring fenced for say local housing or healthcare provisions, but again not so much mileage for central party policy.

 

[Westdene Seagull]

But I remember I once received a big discount as I lived on my own, and when I moved out I paid zero as the house was empty.

You would have probably got a 25% discount but nowadays you have to pay on empty houses.

 

[Buzzer]

This was taken form the comments section from the guardian and I've got to say, it's extremely compelling for many (but not all) of its arguments:


LABOUR’S MANSION TAX IS AN ECONOMIC FALLACY:


1) It won’t raise £1.2 Billion of net profit.


Labour have mistakenly done their calculations as if the Mansion Tax will be operating within a vacuum. The £1.2 billion is in fact the estimated GROSS PROFIT. The NET PROFIT will be much less due to the following resultant revenue losses:


A) The number of £2m+ properties will reduce because they will:
i) Be undersold at £1,999,999
ii) Be split up into multiple less-than-£2m properties
iii) Be divided into multi-tenure leasehold / freehold titles with each component worth less than £2m
iv) Become shared ownership, with different family members owning different parts of the property, with each share worth less than
£2m


B) The admin costs associated with operating the Mansion Tax


C) The huge loss of revenue due to leakage of Stamp Duty, Capital Gains Tax and Inheritance Tax


2) £1.2 billion is not enough to make much difference to the NHS. Last year’s NHS bill was £95 billion and the shortfall £30 billion


********************************************
LABOUR’S MANSION TAX IS POORLY TARGETED AND INHERENTLY UNFAIR:


It’ll affect too many of the wrong people and not enough of the super-rich, for all the following reasons:


1) 96% of all properties affected are in London & Southeast. It’s a tax that focuses specifically on these areas, as opposed to equally across the whole of the UK; and is thereby discriminatory.


2) The majority of properties affected are not in fact ‘mansions’ at all. 3/4 of the properties affected in London are either flats (38%) or terraced house (36%)


3) Most people living in a £2m+ property have already paid more than their fair share of taxes.


They’ve already paid potentially over 70% of their family’s hard-earned income as INCOME TAX, STAMP DUTY TAX and INHERITANCE TAX. And then there’s also VAT and possibly CAPITAL GAINS TAX too! Not to mention COUNCIL TAX. That’s 6 taxes already! Someone’s net worth may be £2m, but if they and their family earned £6.7m and have ALREADY PAID TOTAL £4.7M IN TAXES leaving only 30% left, they’ve already paid more than their fair share.


4) Many people living in £2m+ homes are cash-poor asset-rich. They may be comparatively rich, but they are NOT the super-rich.


Labour’s proposed fudge of allowing such people to defer payment of the Mansion Tax (as opposed to be exempt) is akin to a huge addition to STAMP DUTY TAX and IHT, both of which are already high taxes. If they can’t afford to pay the tax then they’re clearly NOT the ‘super-rich’ and so shouldn’t have to pay it at all!


5) It fails to take MORTGAGES into account.


Someone who owns a £2.5m property with £700K mortgage and £1.8m net equity will not only have to pay the tax, but also pay the same amount as someone who owns a £2.5m property outright.


6) There will be far too many innocent casualties.


For example: A family I know purchased a house for £2m+ and spent a huge sum converting the house to be disabled-friendly for their paraplegic daughter. They will have to sell the house making a huge loss, as the disability modifications do not add value to the house; and as a result they they will have to sack the daughter’s carer and won’t be able to pay her future hospital bills.


7) MIDDLE INCOME families will be affected.


Middle-class families who are living in a property valued at £2m+ will have to pay Labour’s Mansion Tax if they earn as little as £42,000 GROSS ANNUAL INCOME or more. The majority of these individuals and families have mortgages on their properties and have to work hard to be able to pay their bills. They are by no means the ‘super rich’ and quite simply will not be able to afford to pay the Mansion Tax.


8) Too many of the ‘super rich’ won’t be affected.


A wealth tax on assets should not be selective and only target properties. It’s unfair to tax only those who have (wisely) chosen to invest their wealth in property and not others who’ve invested theirs in other assets. For example:


A) A guy I know is worth £485m. Aside from his huge annual income, he owns a property valued at £1.9m, plus a fleet of luxury sports cars worth £20m, a private jet worth £8m, a helicopter worth £2.1 million, and paintings worth £20m; with a combined total asset value of £52 million (which by no means is the extent of his assets); and yet he will not be liable to pay anything extra whatsoever. Whereas, someone who owns a single property valued at £2m+ would.


B) Someone who owns 100 properties each valued at £1m, totalling £100 million, would not be liable to pay any additional tax whatsoever. Whereas, someone who owns a single property valued at £2m+ would.


****************************************************************
IT’S NOT JUST THE ‘SUPER RICH’ BUT THE AVERAGE
PERSON WHO WILL BE AFFECTED IF THE MANSION TAX IS IMPOSED.


Why? For the following reasons:


1) It’s so unfair that the ‘super rich’ won’t tolerate being forced to pay it and will avoid paying via many plausible avoidance methods. Many of the ‘super rich’ will cash in and move their wealth and likely their businesses and themselves too out of the UK.


This will result in the country’s economy taking a consequential nose-dive and a huge loss of revenue for the Treasury. Taxes affecting YOU will have to be substantially increased; AND due to the, so will public spending be significantly cut, which will inevitably mean a curb on benefits.


2) When INHERITANCE TAX was originally introduced it was promised that it would affect only the rich, but now even the average person has to pay it; and so will the very same thing inevitably happen with respect to the Mansion Tax.


The net is already wider and will encompass far more people that people realize; and it will indubitably get wider still, exactly as happened with INHERITANCE TAX which. Don’t be so naïve to think Labour’s ludicrous mansion tax will not affect you! It will. It’s just a matter of time.

 

[Machiavelli]

They really are a dire selection of reasons, Buzzer, probably all set out by some bod paid by a thinktank or the -- appropriately named, inappropriately spelt -- Koch brothers.

 

[Buzzer]

They really are a dire selection of reasons, Buzzer, probably all set out by some bod paid by a thinktank or the -- appropriately named, inappropriately spelt -- Koch brothers.

I did say that not all appeared valid but I do doubt sincerely that it will raise £1.6bn; I do think it's a drop in the ocean compared with what's needed and thus appears petty and punitive, that many people are asset-rich and cash-poor - It seems bizarre that we take this factor into account when granting Legal Aid, for instance yet will tax them with the other hand for something beyond their control; that the super-rich whom it is supposed to target will undoubtedly avoid paying this tax just as they always do and that it is a blunt instrument where someone can own 3 houses at £1.8M each and not pay a penny and another who owns 1 at £2M.


But mostly I sincerely doubt it will raise anything close to £1.6bn and about as effective as trying to plug the deficit gap as solving an algebra problem by chewing gum.

 

[Machiavelli]

I did say that not all appeared valid but I do doubt sincerely that it will raise £1.6bn; I do think it's a drop in the ocean compared with what's needed and thus appears petty and punitive, that many people are asset-rich and cash-poor - It seems bizarre that we take this factor into account when granting Legal Aid, for instance yet will tax them with the other hand for something beyond their control; that the super-rich whom it is supposed to target will undoubtedly avoid paying this tax just as they always do and that it is a blunt instrument where someone can own 3 houses at £1.8M each and not pay a penny and another who owns 1 at £2M.


But mostly I sincerely doubt it will raise anything close to £1.6bn and about as effective as trying to plug the deficit gap as solving an algebra problem by chewing gum.

You might be right on the amount it raises. But that's probably all dependent on what else goes with it to crack down on 'aggressive tax avoidance', which requires international -- probably global -- agreement.
One other point, though, if you've got an asset of £2m+, that comfortably puts you in the top 1% wealth bracket, so poverty pleading by that lot doesn't really wash with me.

 

[sten_super]

They really are a dire selection of reasons, Buzzer, probably all set out by some bod paid by a thinktank or the -- appropriately named, inappropriately spelt -- Koch brothers.

I agree, they are a load of horse shit, clearly written by someone sitting in a £2m+ house with a chip on his shoulder. Many objectors to the 'mansion tax' claim it's about the imposition on the asset-rich, cash-poor but it seems to me that really they are just ideologically opposed to taxes at all (at least any that affect them).

Having said that, I do agree that the sudden imposition of a tax at £2m (and not a penny below) seems a bit misguided. I'd be in favour of increasing the graduation of existing taxes if you could design them to have a similar fiscal impact - i.e. extend the boundaries of council tax and stamp duty (which I believe already extends to £2m?). All this in concert with closing existing tax loopholes on earnings.

 

[Machiavelli]

I agree, they are a load of horse shit, clearly written by someone sitting in a £2m+ house with a chip on his shoulder. Many objectors to the 'mansion tax' claim it's about the imposition on the asset-rich, cash-poor but it seems to me that really they are just ideologically opposed to taxes at all (at least any that affect them).

Having said that, I do agree that the sudden imposition of a tax at £2m (and not a penny below) seems a bit misguided. I'd be in favour of increasing the graduation of existing taxes if you could design them to have a similar fiscal impact - i.e. extend the boundaries of council tax and stamp duty (which I believe already extends to £2m?). All this in concert with closing existing tax loopholes on earnings.

Couldn't disagree with any of that.

 

[Vegas Seagull]

You might be right on the amount it raises. But that's probably all dependent on what else goes with it to crack down on 'aggressive tax avoidance', which requires international -- probably global -- agreement.
One other point, though, if you've got an asset of £2m+, that comfortably puts you in the top 1% wealth bracket, so poverty pleading by that lot doesn't really wash with me.

You clearly are too poor to understand wealth, so why comment?

 

[mikeyjh]

You might be right on the amount it raises. But that's probably all dependent on what else goes with it to crack down on 'aggressive tax avoidance', which requires international -- probably global -- agreement.
One other point, though, if you've got an asset of £2m+, that comfortably puts you in the top 1% wealth bracket, so poverty pleading by that lot doesn't really wash with me.

You do wonder, in reality, how many people there are struggling to make ends meet while living comfortably in a £2m property. That said, far better to go after those greedy *******s who have a spare box room in their council flat right? Bloody scroungers.

 

[Herr Tubthumper]

You do wonder, in reality, how many people there are struggling to make ends meet while living comfortably in a £2m property. That said, far better to go after those greedy *******s who have a spare box room in their council flat right? Bloody scroungers.

If I was struggling to make ends meet, but living in a 2m house, I think I know what I'd do.