Will you be affected by the Mansion Tax?

The idea of a ‘mansion tax’ has come up again at the recent party political conferences. The term has been bandied about in the past, and now Labour has proposed the idea as a way to fund the NHS.  But what exactly does it mean and who will it affect and how? Well, we’ve tried our best to answer some burning questions on the topic…

What is it?

The ‘mansion tax’ would be an annual charge for owners of properties worth more than £2m, according to Labour party leader, Ed Miliband.

Definition of a mansion

When you think of a mansion it may conjure up images of old stately homes, in their own grounds or with acres of land surrounding it. According to online estate agent, Rightmove, £2m properties include a two-bedroom apartment in an Art Deco building in London but also a six bedroom, four floor detached home in Hale, Greater Manchester.

Who will it affect?

There are various answers to this question depending on who you ask. Different estate agents give different figures, but to give you an idea, the ‘mansion tax’ is said to affect between 58,000 and 110,000 homes across Britain. The reason for this wide range may be due to a debate about how homes are valued, as currently, council tax bands are based on valuations of homes made in 1991. Although, at the Labour party conference, Ed Balls said the rules would include the Queen and Prince William but there were also exemptions for those living in National Trust properties that are open to the public.

Why is it needed?

The scheme is proposed to raise £1.2bn a year towards funding the NHS, according to the Labour party. However, some analysts have highlighted that the ‘mansion tax’ is not as straightforward as it sounds, questioning how much would actually be raised and the effect it would have on house building.

Where will the Mansion Tax apply?

Most of the properties affected would be in London and the South East of England, roughly 80% of properties that meet the eligibility criteria.

How much will it cost?

Labour’s mansion tax is estimated to cost about £250 a month for someone in a home worth between £2m and £3m, although final costs have yet to be set.

There are concerns that poorer pensioners in expensive properties would be badly affected, as well as people who are asset rich but cash poor.

In response to this concern, Shadow Chancellor, Ed Balls, states that ‘long-standing residents’ on less than the higher rate of income tax (less than £42,000 a year) would have a right to defer the charge ‘until the property changes hands’.