9th April 2014
The proposed mansion tax as proposed by the Liberal Democrats and Labour would likely generate under £1.2bn in tax revenue per year but over 95% of this income would be derived from homeowners in London and the South East, according to property website Zoopla.co.uk.
Zoopla has conducted analysis of all those properties currently valued at over £2m and found that over 82,000 homes would be liable to pay the annual levy if the current proposals for a mansion tax were to be introduced. On average, each of the 82,000 property owners, more than the government’s current estimates, would be required to pay an extra £14,500 per year in tax.
The proposed tax would effectively be a ‘London tax’ with 87.4% (£1.04bn) of the take coming from Londoners, the rest of the South East contributing 7.9% (£94m) and the whole of the rest of country combined liable for 4.7% (£56m).
More than one third (35.8%) of the UK total would be paid by owners in a single borough, Kensington & Chelsea, where £427m of the annual charge would fall on the 18,660 properties currently worth over £2m there.
More than two thirds (67.2%) of the national revenue raisefrom the proposed mansion tax would come from just three London boroughs; Kensington & Chelsea, Westminster and Camden.
Zoopla spokesman Lawrence Hall says: “Homeowners in London and the South East already pay the lion’s share of UK property taxes with the stamp duty thresholds placing a heavy burden already on higher priced properties. Implementing an additional charge based on higher property values over an arbitrary threshold would only serve to further distort the market.”
“Not only have the Lib Dems and Labour overestimated the amount the proposed tax would generate (up to £2bn estimated versus actually under £1.2bn) and underestimated the number of homeowners that would be affected (70,000 estimated versus over 82,000 currently and growing daily), but it’s also hugely misrepresentative to call it a ‘mansion tax’ when most of the burden will fall on relatively modest family homes and flats in London.”