Ed Balls has said that the proposed Labour mansion tax will
be £250 a month on properties over £2 million, and 1% above £3 million.
He has also said that it will be an ownership tax, as it
will be paid by investors.
So, firstly, how will they identify the owners to see who
has a property worth over £2 million?
They can’t look at sold prices, as this will not capture
properties where the value has inflated above £2 million since it was purchased.
So, HMRC will have to look at every single registered sale in
the UK and index the value up to present day values. That sounds fun!
BUT…if it is just done as a desk-top exercise, this won’t
capture physical changes – a wreck that has been done up, for example, will not
be detected. HMRC can’t use the upper band of council tax as it is decades out
of date and bears no relation to current capital values.
So, given the above is almost impossible, they would instead have to go for self-assessment; this will throw up
an awful lot of houses valued at £1.9 million, as whether a property is above
or below £2/£3 million will mean that the tax varies from nothing, to £3,000 annually, to potentially
£30,000 annually and rising. This will be hotly contested, and there will need to be a
system for dispute resolution, which will be very expensive to administer (m'learned friends ain't cheap), all of which will be money that doesn't go to the NHS, which the tax is 'designed' (there is no way this tax has been designed) to help.
Also, and more importantly, we have an extraordinarily
complicated leasehold system in this country: and if it is an ownership tax, as
proposed, this means that every interest in a house or flat held on any
type of tenancy or lease will have to be valued to see if it qualifies. To say
this is daunting for HMRC is an understatement! I have to add that, as a
Chartered Surveyor, the prospect of this happening has me almost weeping with
happiness.
There are so many other problems that I haven't included here, I mean where do you even start...but the final point I would make is that it would mean every millionaire with property currently
worth over £2 million will have the opportunity to stratify their title so that at no level is there an
interest worth £2 million. Why they don't just propose to re-value council tax bands, I mean, what the...but anyway.
The whole thing is almost hilariously unworkable. I would urge you all to
vote Labour, just to see what happens.
