Mansion Tax is outdated and unnecessary: top 1.6% of households already contribute 45% of Stamp Duty
New research published today by the Centre for Policy Studies reveals that any case for a Mansion Tax is now redundant as recent tax reforms have significantly increased the tax burden on higher value properties.
The Shrinking Case for a Mansion Tax, by Lucian Cook, Director of Research at Savills, shows that properties that would be targeted by a Mansion Tax have already been subjected to significant tax hikes since the policy was first mooted five years ago:
- Recent Stamp Duty Land Tax reforms have increased the tax burden on “Mansions” by £1.1 billion – the top 1.6% of households now pay almost half of all SDLT.
- The introduction of, and recently increased rate of, an Annual Tax on Enveloped Dwellings has added at least another £100 million a year to the tax paid by “Mansions”, closing the loopholes which existed when the Mansion Tax was first proposed.
- As an example, the tax paid on a house now being sold in SW London for £2.5 million has increased by 405% since 2009.
Lucian Cook comments:
“The recent reforms of property taxation are raising as much from high value properties as any Mansion Tax. If in addition to these reforms, a Mansion Tax were introduced after the next election, it would add a layer of complexity and unfairness into the tax system for residential property. On top of that, the economic impact of a Mansion Tax is impossible to quantify but would clearly be damaging, not least in seriously undermining the attraction of the UK (and London in particular) to overseas investors.”
Tim Knox, Director the Centre for Policy Studies, comments:
“The proposed Mansion Tax is little more than an appeal to envy, and should not be presented as an integral part of any coherent manifesto. Consider, for example, Labour’s and the Liberal Democrat’s support for the Dilnot proposals to reform long-term care for the elderly: these were intended to address the concern that many individuals are today driven to sell their homes to pay for their long-term care in old age. That is considered to be a bad thing for the individuals concerned. So where is the coherence in the same parties now proposing a policy which could similarly drive cash-poor, asset-rich households to sell their houses?
No. For economic recovery, the UK does not need new taxes targeted at the aspirational, the successful and sometimes the fortunate. Rather, it needs lower, simpler taxes which encourage innovation and productivity and which stimulate, not penalise, wealth creation.”
Click here to read the full report.
Media Impact:
- The Sunday Telegraph: “Leading think tank the Centre for Policy Studies slammed the annual levy and said it would damage the UK’s investor-friendly reputation, deter workers in sectors such as financial services from moving to London, and chase away high net worth individuals from doing business in Britain.” Mansion tax: a threat to the UK economy and an appeal to envy
- The Sunday Telegraph: “The Centre for Policy Studies said that 18,000 households pay 45 per cent of the stamp duty total due to recent reforms, increasing the tax burden on high value properties from £700 million in 2013 to £1.8 billion in 2015.” Labour’s mansion tax ‘outdated and unnecessary’
- The Economist: Labour’s proposed mansion tax is a clumsy attempt at a long-overdue reform
- The Daily Mail: 1.6% of families pay half of all stamp duty: Reforms ‘make Labour’s mansion tax redundant’
- The Times: Mansion tax made redundant by new stamp duty
- LocalGov: Mansion Tax ‘redundant’ finds think tank
- Express & Star: Labour mansion tax plan ‘outdated’
- ICAEW: Think tanks attack mansion tax
- Prime Resi: The Cook Report: Mansion tax is ‘outdated and unnecessary’
- INVEZZ: New report highlights inequality of mansion tax
- The Business: Mansion tax is outdated and unnecessary, says new research from the Centre for Policy Studies
- MSN News: Mansion tax: a threat to the UK economy and an appeal to envy
- 24Dash.com: Labour’s ‘mansion tax’ is outdated and unnecessary, claims think tank
- Tax News: Think Tank Criticizes UK Mansion Tax Proposals
- LandlordZone: Sandfords supports CPS Mansion Tax Paper
