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Labour’s mansion tax costs to hit property owners and all taxpayers
Over 120,000 households could face a bill of up to £4,800 each to have their property revalued under Labour’s mansion tax proposals.
The total cost to home-owners of having their properties revalued would be some £110m, says Savills. If they do not pay for the revaluations, they could face fines of thousands of pounds.
It is estimated that of the 120,000 who would have to get revaluations, 97,000 owners would end up paying the tax.
However, taxpayers would have to foot a bill of around £65m because HMRC would have to cover its costs of valuation disputes.
It would want to defend itself against a number of home owners who would bring challenges. HMRC would also dispute some of the revaluations and appeal to a district valuer.
The Savills report suggests that many “mansion tax” owners could be asset rich and cash poor: of the 97,000 subject to the annual levy, over a third have been owned for more than ten years, with 10,400 having been owned for over 30 years.
Ed Miliband has pledged that if Labour wins power, mansion tax will be levied on properties valued at £2m and over. The annual levy on homes worth between £2-£3m will be £3,000.
Owners of properties worth over £3m could pay more. Savills believes there will be six bands.
Labour claims the tax will raise £1.3bn which would be used to fund improvements to the NHS.
Lucian Cook, director of residential research at Savills, said: “The valuation requirements and associated potential for dispute mean that a mansion tax would be particularly costly and complicated to administer, reducing its efficiency a revenue raiser for the Treasury.
“The potential costs borne by the taxpayer will be a further concern to long-term owners who are often asset rich but cash poor and for whom the tax itself is a significant concern.”
Yesterday, the BBC news said that polls are showing that no party will win the election outright, but that if Labour were to put together a coalition with either the SNP or Liberal Democrats, it would prove unassailable for the Tories. Both the SNP and LibDems support a mansion tax.
