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Labour to persist with mansion tax despite stamp duty reforms

Shadow Chancellor Ed Balls says he will press ahead with his controversial mansion tax plans if Labour wins the next general election despite radical stamp duty reforms announced yesterday.

Under the new progressive stamp duty tax system unveiled in Chancellor George Osborne’s Autumn Statement, buyers purchasing a home valued between £2m and £3m will now face a stamp duty bill of £153,750 – an increase of £53,750 from the £100,000 charge they would have paid under the previous slab structure.

The Labour mansion tax plans would require owners of homes in that price band to pay an additional levy of £3,000 per year.

The charge would be higher for properties worth more than £3m, though details of the increased tax have not yet been disclosed. The Institute for Fiscal Studies said owners of properties valued at £3m and above would need to be hit with a tax bill of around £10,000 a year to achieve Labour’s target of raising £1.2bn annually in revenues.

In an interview with ITV today, Balls was asked if he would persist with the mansion tax in the wake of the Autumn Statement.

He said: “I think people at the top with properties over £2m aren’t paying enough tax at the moment; 95 per cent of them are not moving in any year and they should be paying more.

“I want to get some money for the NHS and I think particularly for foreign investors but for also people with very high-value properties, the mansion tax is fair.”

The mansion tax proposals were slammed by brokers as being “bonkers” and “PR fluff’ when they were unveiled in October by the shadow chancellor.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. If you’ve got the Balls to do it…. still, has anyone heard what Labour themselves would have done with Stamp Duty had George not addressed it yesterday? I suspect it would have been along the lines of the Scottish solution but I may be wrong. Would be interesting to know….

  2. Unless we want to go back to the 30’s, in terms of welfare spending (as the BBC pointed out) then money needs to be raised for public spending from somewhere. Why should those who have sen the value of their properties rocket, with no effort on their part, be exempt?

  3. The easiest way for the Chancellor to resolve the UK housing crisis and save £12 billion per year is stop the tax subsidy on BTL mortgages. Currently the 1.2 million landlords receive the equivalent of £10,000 per annum in subsidy by allowing them to offset their mortgage interest against their rental income. This equates to a taxpayer paid mortgage of £300,000 approximately per landlord in the UK. It is no wonder why HM Treasury finds itself in debt as it has to subsidise young adults through Help to Buy further compounding the problem!

    Obviously savings on winter fuel allowance to 40% taxpayers like me can be easily cut, but the real issue is sort out the ridiculous tax subsidies in the housing market. It will cause a temporary crash but it will allow FTBs and tenants to purchase and obtain mortgage at 3 or 4 times income rather than now at 8 to 10 times being required in many locations. It will also allow Local Authorities to purchase housing stock for tenants who cannot or do not wish to get on the housing ladder. It will hopefully just leave the landlords who have purchased their properties outright and dramatically reduce the number of new entrants into the BTL market.

    It is a virtuous circle as the Treasury will receive a lot of income from CGT and Stamp Duty and a lot of capital will flow back to the banks and into SMEs boosting the UK economy and house prices will slowly rise again. QED.

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