The Mansion Tax

[CPR Dave]

What do we think?

There's a couple of not very big ordinary family homes for sale on my street that will fall foul of this. 

Seems totally arbitrary to tax these people more than others imo. J hope the treasury will pay the cost of collection too, rather than burdening the council who won't benefit at all from this tax.

They should have just increased income tax.

[PeckhamRose]

An interesting point.  In my work I met lots of different people in different circumstances; individuals finding themselves through no fault of their own, living in such houses having inherited them, but not themselves having the means to pay to keep them so they  moved away, or they simply didn't want to move from the place of their family life through generations.  Some of us may think a nice problem to have, but emotionally very difficult a situation to be in.  I agree that income tax always seems to be a fairer way.  My bugbear is and always be taxing private pensions, when one has already paid tax on the earnings that make them up!  The entire amount makes up the tax and not just taxed on the interest made since.  

 

[Reg Smeeton]

You're joking, right?  The 'mansion tax' only kicks in at £2m, at which point it's a mere £2,500 per year.  Houses like that have gained £00's of thousands in recent years, completely free of capital gains tax.  The people who can afford £2m houses have either (a) lived in them for decades, in which case it's almost entirely unearned wealth, or (b) bought recently on a combination of huge salary [out of which £2.5k is peanuts], or (c) on the back of a huge inheritance (more unearned income).   Income tax penalises the workers, wealth tax penalises those who in many cases have landed a large part of this huge wealth without lifting a finger. (As a long term ED resident I count myself in this latter category, by the way - my house is now worth about 10x what I paid for it, my income has maybe doubled in that time).

My heart does NOT bleed for those many elderly couples sitting in multi-million pound houses on Burbage Road - homes that were built with big Victorian families in mind - who might have to fork out £5k more per year for the privilege.  If this really does pinch them financially then perhaps it is time to trade down to the "squalor" of a million pound house or luxury apartment in East Dulwich.  

[ianr]

 

3 hours ago, CPR Dave said:

J hope the treasury will pay the cost of collection too, rather than burdening the council who won't benefit at all from this tax.

"High Value Council Tax Surcharge – The government will introduce the High Value Council Tax Surcharge a new charge on owners of residential property in England worth £2 million or more, starting in 2028-29. Local authorities will collect this revenue on behalf of central government. Revenue will be used to support funding for local government services, with further detail to be set out at the next spending review. The government will consult on implementation of HVCTS in the new year."

https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html#policy-decisions, which shows (Section 5.1, item 54) a projected revenue of £400m in the first year.

Edited 17 hours ago by ianr

[malumbu]

Don't think I know anyone in a £2m house, so on a personal level irrelevant.

However on a related matter there does need to be reform of Council Tax as many around here have done large extensions but still being charged the same as some who are in properties which have not been touched.

It would be better to discuss the budget as a whole.  Off to do some research on issues that matter to me, sustainable transport, climate change and the like.

[Cyclemonkey]

Won't someone think of the poor people burdened with a £2M house "through no fault of their own" .....  seriously?

This is literally unearned money mainly gained through govenrment policies that has given home ownership preferential treatment for decades but you think it is fairer to rise income tax?  Young graduates are already effectively paying a higher marginal rate of income tax due to student loan repayments and can barely afford to rent in London,   but it is fairer not to touch the unearned housing wealth of boomers?  

[CPR Dave]

That's exactly my point Ian. The council will collect on behalf of the government. Not on behalf of themselves. The government then decides how and where it is spent. 

So poor people in Southwark might end up paying Southwark to collect the government's mansion tax and watch the government then squander that money anywhere else they see fit. 

I really do hope the government reimburse the council for collecting this tax on their behalf.

 

As regards villas in Burbage road, I'm actually talking about two small family homes currently on sale on my road in Se22 for about £2m.

No doubt neither will now be saleable and this government will miss out on £155,000 of stamp duty tax that will be payable on these mansions when they eventually sell under another government that cancels this capricious folly.

[NewWave]

if small family homes are priced at £2.000.000 in SE22 I suspect they are over priced.

[Sue]

30 minutes ago, CPR Dave said:

That's exactly my point Ian. The council will collect on behalf of the government. Not on behalf of themselves. The government then decides how and where it is spent. 

So poor people in Southwark might end up paying Southwark to collect the government's mansion tax and watch the government then squander that money anywhere else they see fit. 

I really do hope the government reimburse the council for collecting this tax on their behalf.

 

As regards villas in Burbage road, I'm actually talking about two small family homes currently on sale on my road in Se22 for about £2m.

No doubt neither will now be saleable and this government will miss out on £155,000 of stamp duty tax that will be payable on these mansions when they eventually sell under another government that cancels this capricious folly.

"Squander"?

"Capricious folly"?

[Reg Smeeton]

40 minutes ago, CPR Dave said:

That's exactly my point Ian. The council will collect on behalf of the government. Not on behalf of themselves. The government then decides how and where it is spent. 

So poor people in Southwark might end up paying Southwark to collect the government's mansion tax and watch the government then squander that money anywhere else they see fit. 

I really do hope the government reimburse the council for collecting this tax on their behalf.

 

As regards villas in Burbage road, I'm actually talking about two small family homes currently on sale on my road in Se22 for about £2m.

No doubt neither will now be saleable and this government will miss out on £155,000 of stamp duty tax that will be payable on these mansions when they eventually sell under another government that cancels this capricious folly.

According to Rightmove, £2m will get you a 5 bedroom 3 bathroom house on Underhill Road, with a 60ft garden.  If you think that's small, I can't imagine what kind of palace you must live in.  Jeez.

[Spartacus]

If you think the government will only be taxing homes over £2 million then wait a few years till they apply a property tax to all homes. 

Trust me, this is only a foot in the door and soon we will.all be paying it, even renters who's rents will go up to cover their landlords costs. 

[Reg Smeeton]

Despite making over £500k gain for doing nothing other than living in the house I bought, this budget is barely affecting me at all. 

Meanwhile I watch under 30s struggle to afford rent in shared houses while I look back to the happy days when us boomers could buy a two bed flat in East Dulwich on a single salary.  It's stupidly unfair, and the only way to make it fair will be for the government to redistribute some of this unearned wealth - otherwise, just wait till the angry Millennials get into power.  A property tax seems like the fairest way to do this.   

p.s. I was expecting that the Government WOULD put up property taxes on houses like mine.  Maybe they will one day.  Seems fair to me.

[Dogkennelhillbilly]

2 hours ago, CPR Dave said:

The council will collect on behalf of the government. Not on behalf of themselves...

two small family homes currently on sale on my road in Se22 for about £2m...

No doubt neither will now be saleable.

1) local government and central government are both just different parts of government

2) if anyone is stuck in the nightmare position of having an unsaleable £2m house in Dulwich, don't suffer in silence. Reach out to me - I'll buy it from you next week for £1m. The community is ready to rally around and support you! 🙏🙏🙏

[Cyclemonkey]

May be we should hold a Go Fund Me for the poor unfortunate individuals suffering the indignity of being stuck in a £2M "small family home".  

Edited 7 hours ago by Cyclemonkey

[ed_pete]

Why make it one property ? If own more that one property which together amount to over £2m then why should I escape this measure ? (I don't btw).

[Patatina]

The biggest problem in the UK is that we don't know if we want to be a European social democracy or the US when it comes to tax - and we are left with the worst parts of both.

The US has a strong growth economy and incentives that has lead to high standards of living for the middle classes.

Europe has high tax, but distributed fairly across different earners, and has lead to good public services and satisfaction for all.

In the UK, we have an ultra-progressive tax with disproportionate burdens on high earners. But we have poor public services because that tax burden is not spread more fairly and is therefore limited. Meanwhile, high earners feel disincentivised to work and will suppress earnings to avoid tax traps.

 

 

 

[Angelina]

There is nothing in the budget to promote growth, which is what we desperately need.

The wealthiest pay more already, with the higher rate tax. I’m sure they can afford £7.5k but we need to encourage successful people and business to invest and stay in the country. 

[CPR Dave]

12 hours ago, Reg Smeeton said:

According to Rightmove, £2m will get you a 5 bedroom 3 bathroom house on Underhill Road, with a 60ft garden.  If you think that's small, I can't imagine what kind of palace you must live in.  Jeez.

Those 5 bedrooms are all tiny though. Even the largest of the master bedrooms in these old jerry built houses are often no larger than 15 square metres. For context the minimum size for a two man prison cell is 8.5 square metres. 

It's hardly palatial luxury being offered round here. And after you've paid £155,000 in tax to buy the house, and another £3000 a year to the council to empty your bins twice a month, this greedy government is coming after you now taxing you what amounts to another 12.5% of the value of your home every ten years. 

[Cyclemonkey]

I mean these people always have the choice to, you know, move.

[richard tudor]

If you were in your late seventies early eighties,  lived and grew up in in the area and house for most of your life would you like to move to a strange area where you know nobody.

The world now is turning into a sad and cruel place.

[Ebenezer]

36 minutes ago, Cyclemonkey said:

I mean these people always have the choice to, you know, move.

"They can move" is basically gentrification in a sentence. 

[Angelina]

London is changing to an older wealthier population, due to inflated property values pushing younger people out to other areas ( unless or until they inherit). It doesn’t mean that they are rich, you can be asset rich and cash poor. 
 

It’s not the best way to increase taxes but it’s not really looking at being fair. 

[vladi]

13 minutes ago, richard tudor said:

If you were in your late seventies early eighties,  lived and grew up in in the area and house for most of your life would you like to move to a strange area where you know nobody.

The world now is turning into a sad and cruel place.

And when that couple in their late 70's and 50's and 80's pop their clogs, the government will be back for an IHT tax grab at 40% of the value. For anyone in their 30's and 40's I would seriously suggest emigrating to Australia or Canada where there's on IHT

[Reg Smeeton]

14 minutes ago, richard tudor said:

If you were in your late seventies early eighties,  lived and grew up in in the area and house for most of your life would you like to move to a strange area where you know nobody.

The world now is turning into a sad and cruel place.

If you are in your eighties and you now live on your own in a £2m house that you bought for £63,000 in 1968 then of course you are entitled to live there as long as you can physically do so.  But I also like to think of a local dad I know, a teacher, who lives with his wife and kids in a modern two bed flat in SE22 that they part-own (thanks to a contribution from wife's parents).  The dad goes running in Dulwich Park every morning first thing, and told me wistfully how he sometimes looks out at all these huge unused gardens with rusting trampolines and empty bedrooms and wonders how the world came to this.

4 minutes ago, vladi said:

And when that couple in their late 70's and 50's and 80's pop their clogs, the government will be back for an IHT tax grab at 40% of the value. For anyone in their 30's and 40's I would seriously suggest emigrating to Australia or Canada where there's on IHT

There's a brilliant way to avoid IHT.  It's called "give it away while you are still alive - keeping £650k + your annuity/company pension to see you through your final years".  If I have a £2m house and don't want to move or incur IHT, then there's the option of taking out a loan against the value of the house and living off that till I pop my clogs.  It's not always the most financially efficient thing to do, but as they say, you can't take it with you.

[Cyclemonkey]

What do you all think we younger people have had to do for years if we can't afford the rent or to buy in our area?   We move AND we don't get to trouser £2M of unearned housing wealth in the process.   I no longer live where I grew up as I could not afford to stay there, same for my partner.

Of course if you are unfortunate enough own a £2m house in East Dulwich,  the good news is there are plenty of houses and flats that cost considerably less than £2m so someone keen to avoid the £2m houe tax could move  and stay in the area.