Dec 10, 2009
The Liberal Democrats’ proposed mansion tax on Â£2m properties would raise Â£1.05bn and hit 32,500 homeowners, according to new research from property website Zoopla.co.uk.
The website analysed all the properties in the country valued over the Â£2m threshold and calculated how much tax would be raised.
On average each homeowner would pay Â£32,700 per year, with those just above the threshold paying Â£20,000 while those with more expensive homes paying much more.
The tax would be a hugely skewed to homeowners in London and the South East. 91% of the tax take would be paid by homeowners in these two regions, a massive Â£955m. All the other regions put together would pay the remaining Â£95m between them.
Astonishingly, 10% of the total national tax take would come from just one district in London – Holland Park. The top ten areas, all of which are in just four London boroughs, would account for over half (54%) of the UK mansion tax yield, a total of Â£567m. Kensington & Chelsea, Westminster, Hammersmith & Fulham, and Camden would together pay 61% of the UK total, with Kensington & Chelsea alone paying almost a quarter (24% or Â£252m). Overall, Londoners would pay 80% of the UK total.
Nicholas Leeming, commercial director of Zoopla.co.uk said: “The Â£1.05bn that would be raised from this tax is some way short of the Â£1.7bn mooted. The Libdems have overestimated how many properties are still worth that much money. Nevertheless, it is a large sum of money to be paid by a small number of people.
He continues, “Property in London and the South East is already the most highly taxed in the country. Stamp duty thresholds and inheritance tax already discriminate against those who live in these two regions. The Libdems’ so-called mansion tax would slap another huge bill on the same areas at no political cost to themselves given the low levels of support they have in these areas. To expect residents of just four local authorities to stump up Â£640m in tax while most of the country escapes scot free is an outrage.
“The mansion tax would hugely distort the housing market around the Â£2m threshold and cause sharp price falls in a broad band up to Â£2.5m. A few extra pounds on the purchase price taking a property over Â£2m would saddle the buyer with a tax bill of Â£100,000 over the course of a Parliament. Even for comparatively wealthy families, that’s a huge sum to find.”