/ Money

Should property millionaires take a tax hit?

Golden million-pound property

The UK’s property-rich hotspots have hit the headlines this week – and so too has the idea of a mansion tax on million-pound homes. Is it right to charge the ‘millionaire rows’ of Bucks and Surrey a property premium?

If you live in Beaconsfield in Buckinghamshire, or Virginia Water in Surrey, you might find yourself part of a property-rich minority. Apparently, these towns have the highest proportion of homes on sale for £1 million or more in the country.

Despite falling property values around the UK, these towns, located on the capital’s commuter belt, are thriving. Around 46% of properties in Beaconsfield are on sale for £1 million or more, while 25% of these ‘millionaire rows’ can be found in Surrey. Compare that to London, where only 13% of homes are up for £1 million.

The news couldn’t come at a more prescient time. With the Liberal Democrats currently holding their annual conference in Birmingham, the idea of introducing a ‘mansion tax’ on high-valued properties is back on the agenda.

Taxing million-pound pads

Over the past few weeks, debate has raged around whether or not the additional 50% tax rate – which is levied on earnings over £150,000 – has been working.

A letter written to the Financial Times at the beginning of September, and signed by 20 of Britain’s leading economists, called the 50% tax rate a ‘self-defeating way for the Treasury to raise the money and a reduction in tax avoidance would be more effective.’

Business secretary Dr Vince Cable suggested this week that he might be in favour of replacing the 50% additional rate tax with a ‘mansion tax’. The idea was first mooted in 2009, and would see homeowners with properties valued over £1 million paying 0.5% of its value to the Treasury annually. This would not only be applied to residential houses, but commercial properties too.

Pensioners might be punished

Personally, I’m not sure about this. Many people have eschewed pensions over the years, relying on the value of their home to provide them an income when they finally retire. So those who’ve seen the value of their home rocket, despite perhaps not having a high income, may choose to downsize on retirement and use some of the proceeds to buy an income for later life.

A tax of this kind might see these people having less to live on in their older years. At least with the 50% tax rate, you’re generating revenue from those who already have a sufficient income for a comfortable life.

What do you think? Should the denizens of Buckinghamshire and Surrey be forced to pay at least £5,000 a year to the Treasury because their house is worth a fortune? Do you want to see the 50% tax rate abolished?

Comments
Profile photo of william
Member

Again they’re going down the wrong path. So what if your house is worth alot. If its your main residence you should be exempt from this tax. How many retired people on low incomes will be living in an expensive house which they’ve lived in for many many years? How many immigrant families on benefits are living in expensive houses, who ends up paying their tax ? Close legal tax avoidance loopholes, slash MPs home and travel benefits for those whose constituencies are within 100 miles of Westminster etc to raise money, Keep the 50% rate and have a new 60% for those earning more than 1 million ( and that 1 million shouldn’t just be in cash).

Profile photo of rarrar
Member

Houses are easy to tax – they dont move abroad or become ex-pat .
There is nothing wrong with taxing property – council tax is an example – many countries do.
But the tax should be progressive with a sensible threshold i.e. 0.5% of value OVER £1M not 0.5% of £1M.
For simplicity and to avoid arguments over valuation why not just significantly extend the number of council tax bands to cover more expensive property and collect the tax at the same time.
At present most residential property is not taxed in any way – no capital gains tax and usually no inheritance tax.

Member
nd hudson says:
18 November 2011

I think is a wrong idea, after paying years of mortgage interest on your property by working and paying other taxes and Council Taxes etc,. the equity in your property is the only reliable thing remains to move on to either down grade or etc, if that also is tax then what is left for all the had
work etc one has put up with over the years, and what to leave for love ones incase of the evetuality the old age issue and does the Gov’t want all of us to rely on them to pay for our nursing homes etc, if they cannot guarantee that then this is a subject to leave alone.

Member
Liz Lawrence says:
11 March 2012

Council Tax costs are charged to cover the cost of services supplied for individal
citizens. A person in a large house does not use more police provision or firefighter provision, or libraries or hospitals or schools etc than a person living in a small property. Consumption of services does not increase because you have saved and worked hard to live in a nice home. If you were to go to a solicitor or dentist or hairdresser, you would be given a price for the service. The provider would not say, “Oh dear, the cost is £150 but I see you live in a nice big house so you can must pay me £450.instead. The service provided would be the same for all customers. There would be no “punishment” for living in the home of your choice.

Profile photo of wavechange
Member

I agree to an extent, but the discussion is about houses worth over a million pounds. Anyone with a house worth more than that should pay more.

Larger houses tend to have more occupants, so that – on average – there is more demand on services.

Yes it’s right that we should be rewarded for working hard and saving, but there are limits.