I don’t live in a mansion. I live in an upmarket mid-terrace but given that it is in London the lower threshold of £2 million of Labour’s proposed mansion tax is in sight. It is still a distant sight but it is there on the horizon. I will share basics of successful investment journey you must know.
Labour’s Shadow Chief Secretary to the Treasury Chris Leslie was on the BBC Radio 4 Today programme this morning being challenged on the details. Labour still refuses, two weeks before the election, to spell out how this major new tax wedge is going to be implemented.
The Mansion Tax will essentially be a successful Londoners’ tax and as such may well be attractive to many people in the country who are not successful Londoners. If you are a successful Londoner with a mortgage on a £2 million plus home it is likely that you are paying income tax at the “Additional rate” of 45%. Labour proposes to increase this rate to 50% as well as imposing its Mansion Tax. Leslie did admit on the radio this morning that these people will be paying £250 per month. It sounds modest until you multiply it by 12. You can multiply by 2 again in order to pay the 50% tax on the earnings you need to earn. These Londoners will have to earn an extra £6K a year just to carry on with their lives.
London is already pumping a net £34 billion a year into the UK government’s coffers. Labour’s Mansion Tax will be another £1.2 billion paid overwhelmingly by Londoners.
It is easy to propose new taxes on people who work hard and take risks. Don’t be surprised if they opt out of giving you the cash. Once the principle of the Mansion Tax is established the government will start to look at more modest houses to make up the shortfall and grow the tax base.