Mansion tax won't just hurt the wealthy
Ed Miliband plans to wield the axe of mansion tax as a means to close the gap between the haves and the have-nots, but there are fears that this supposed tax on the wealthy could hurt us all.
For starters, let's get something cleared up: although I would love Russian oligarch to be paying their fair share as much as the next person, the fact is the mansion tax will hit people who live in properties that aren't the sprawling estates that the word 'mansion' suggests.
Plenty of, what were, modest family homes in London and the South East will now be worth in excess of £2 million but just because the property is of a high value, it doesn't mean the family or pensioner living in it are extremely wealthy.
Let's not forget, the mansion tax could cost upwards of £15,000 a year.
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Secondly, while the rhetoric around mansion tax is exciting and a probable vote winner, there has been scant detail on just how this money will be collected. There are two likely ways that it could happen.
Council tax rebanding is the most radical way to do it. This would involve revaluing every property in the country and adding additional council tax bands for the most expensive properties.
This is fine if you live in an area where house prices have gone up by less than the national average but if they've gone up more you could see yourself lumbered with a far larger council tax bill. While it could be argued that this would be a fair way to collect mansion tax, it involves hitting those not living in mansions with a bigger bill.
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The other way would be through self-assessment tax returns. This would mean those living in 'mansions' would be forced to pay for a professional valuation of their property and put the figure on their tax return.
However, there are question marks over how long the valuation would be valid for and what would happen if house prices plummeted – would the valuation be revisited? – and also what happens if the taxman doesn't agree with your valuation that states your property falls outside of mansion tax.
Overarching the self-assessment plan is the fact that the government or local authority will have to police it. There will have to be resources given over to make sure homeowners are complying – and guess who pays for that? That's right, we all do whether we live in mansions or not.
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