The phrase ‘mansion tax’ has been echoing around the media recently, with rumours suggesting it could be announced in the March budget.
The prospect of a high value property tax has been welcomed by some, yet caused anger amongst others, and has been widely criticised by many Conservative MPs, who believe it may unfairly hit people in the South, particularly in London.
So how might a mansion tax affect you? And what will it really mean? Here, our expert property team, located in St. John’s Wood offer some advice and predictions.
What might the mansion tax look like?
It has been suggested that Boris has been looking at two options for a mansion tax. An annual charge for higher value homes, or an extra level of council tax for the most expensive properties. However, what the threshold is for what is considered a ‘mansion’ hasn’t yet been revealed. In previous years, Labour pledged to tax those with properties valued over £2 million. If this new mansion tax followed similar lines, this would affect less than 1% of properties in the UK market, although more than half of those properties would be in London.
How will the mansion tax affect you?
If the current government followed the model of previous proposals, then it won’t affect you unless you have a home worth in excess of £2m. Of course, when it comes to property in London, particularly in some prestigious postcodes such as those in and around St. John’s Wood, one- or two-bedroom flats could fall into the mansion tax bracket. However, whether this valuation is based on the actual value of your home, or the council tax band you live in, isn’t clear at this point.
What are the cost implications of the mansion tax?
If mansion tax worked in the same way as it was proposed by previous governments, it would be calculated as an annual charge on the value of your property over the £2m threshold. Therefore, if you had a property worth £2.5m, you would be charged a 1% tax on the £500k, which means you would have to pay £5k a year in mansion tax. Alternatively, the tax could be introduced as a higher band of council tax.
How can people protect themselves from the prospect of a mansion tax?
Whilst it remains to be seen how the mansion tax will hit this time around, property owners looking to temporarily minimise the value of their property should consider putting any extension work or other home improvements on hold until they understand how the valuation side of mansion tax will be calculated.
And if the government allows homeowners to produce their own property valuations, then it’s important to remember you can shop around to find the lowest valuation. After all, finding the right valuation could save you a lot of money over time.
How Attwells can help
Our specialist conveyancing teams have offices in Colchester, Ipswich and St. John’s Wood, and have helped many people sell and purchase high value properties over the years with our fixed fee service. We will be watching very closely for the government to announce their plans for a mansion tax, and if or when they do, we will focus on understanding how these changes might affect our clients and industry, so we can offer the best advice to help them navigate the challenges that mansion tax presents.
Whether the March 2020 budget comes with plans for a mansion tax or not, we have the expert knowledge and experience to ensure your house move goes as smoothly, and swiftly, as possible. Get your instant online conveyancing quote today.