Association of Liberal Democrat Councillors

Mansion Tax – the message

All economy articles
Tuesday, 24th March, 2015

The LGA Lib Dems support Liberal Democrat council groups across England & Wales The LGA Lib Dems support Liberal Democrat council groups across England & Wales

Message in a sentence

The Liberal Democrats want to introduce a High Value Property Levy, or ‘Mansion Tax’, on properties valued at over £2 million to help balance the country’s books and reduce the country’s deficit.

Message in a paragraph

The Liberal Democrats want to introduce a High Value Property Levy, or ‘Mansion Tax’, on properties valued at over £2 million to help balance the country’s books. This will be in addition to Council Tax and separate fromCouncil Tax. It’s important that those who can most afford it help the country get back on its feet by paying their fair share.  It would be totally unfair to balance the books on the back of the poorest in the country, which is what would happen if the richest weren’t asked to pay their fair share.

Message in half a page

High value property is currently taxed very lightly.  A £90 million property in Kensington and Chelsea, for example, is taxed at just £41 a week, or just 0.002% of its value over the whole year.  The average band D Council Tax charge (in England) is £1,468, while the average home is worth £271,000.  So, someone living in an average value home will be spending – relative to the value of their property – 270 times more than the person living in the £90m house in Kensington and Chelsea.  That can’t be right.

It’s important that we all pay our fair share towards balancing the books. Liberal Democrats are not prepared to balance the books on the back of the poorest.  That’s why we’re reducing taxes on productive work and why we want an appropriate tax on unproductive property wealth.

Liberal Democrats want to introduce a High Value Property Levy, or ‘Mansion Tax’, on properties valued at over £2 million.

This will be a UK-wide tax which will be collected locally by local authorities and then passed back to central government, with local authorities being compensated for the cost of collection.

This will be in addition to Council Tax and separate from Council Tax.

By building on the Council Tax system, implementation will be swift and there will be no need for a detailed valuation of the tiny proportion of properties affected.

Using the latest data, we’ll identify a set of bands for properties worth over £2 million and a fixed charge will be applied within those bands so that we raise around £1.5 billion.  Those with properties in the lowest bands will pay a much smaller charge than those in the highest bands.

We’ll use existing data we have from the Valuation Office Agency to provide an accurate estimate of a house’s value, so we’ll be able to value properties without visiting every home.

This is not about imposing new wealth taxes to punish people who have worked, saved and invested for the future. Pensioners who are asset rich, but cash poor will be allowed to defer their annual payment so it is paid on death out of their estate.

The levy will affect around 100,000 of the most expensive homes in the country.  In excess of 99.5% of all homes will not be affected at all by this policy.

ALDC