UK – This inept Labour government decided that the wealthy, with broad shoulders, should pay more tax to support the unsustainable welfare spending in the UK. The Chancellor dreamed up the ‘mansion tax’ which once enacted would result in owners of properties worth more than 2 million paying 2,500 thousand pounds annually in addition to the other taxes such as council tax.
The mansion tax is on a sliding scale with a surcharge of, for example, £7,500 a year for homes worth more than £5 million.
The tax is due to come into effect in 2028 with the next election being no later than 15 August 2029. These homes will be valued not by individual surveyor visitations but by the Valuation Office Agency (VOA) using an automated valuation model which is based upon various metrics.
It is known that the results end up being about £30,000 above the true value according to The Times report. And because this is an automated valuation process there’s bound to be a heavy number of appeals for properties at and just above £2m to be revalued through an actual visitation.
Common sense dictates that you cannot automatically value properties because two properties side-by-side (even terraced houses) with very similar external appearances can have very different values due to the interiors being either modernised or being in poor condition.
The mansion tax will also result in a £2 million home losing as much as £50,000 in value because of the new tax.
The point I am making in this article is that because there will be many appeals and because there are only 8,000 registered valuers of residential properties to deal with appeals, while there are an estimated 190,000 properties were £2 million or more, the commencement of paying this tax for a large percentage is highly likely to take place after the current Labour government has been ousted in the general elections. This makes the tax untenable.
And as it is highly likely that the next incumbent, the Reform Party or perhaps a coalition including the Reform Party and the Conservatives, will dissolve this statute, the actual carrying out of the statute will not take place. I think that this is reassuring to the many people who live in properties valued at about £2 million and who have a limited cash flow and liquid assets.
This situation applies to many people in the UK which makes the tax inequitable for these people. The tax is a bad idea and, as it transpires, it is impractical for the reasons stated.
Another failure by Chancellor Reeves who has demonstrated her lack of competence in both her budgets.
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