Mansion Tax

A mansion tax is a common name for an annual property tax on high value homes, although the term itself is widely regarded as a misnomer. The tax is only a proposal in the United Kingdom, but has proved very controversial and has received widespread media coverage. At present, the most commonly cited trigger point would be a property value of £2 million.

In the United Kingdom, the concept of a mansion tax is widely attributed to Vince Cable. In its original form, proposed in 2009, Cable suggested that all properties valued at over £1million would be taxed annually. He raised the proposed threshold to £2m in January 2012.

In an accommodation with Coalition partners, the proposal was modified and a 7% rate of Stamp Duty Land Tax was levied on house sales over £2 million, following George Osborne's 2012 budget. In contrast to an annual "mansion tax", this one-off tax is only paid when a property is bought.

Support for the original proposal re-emerged at the Liberal Democrat 2012 conference.

The motion called for "an annual mansion tax on the excess value of residential properties over £2 million as a first step towards wealth taxation designed to reduce inequality". It was passed in a vote of over 200 delegates, with two against.

Despite this, the Liberal Democrat's coalition government partner, the Conservatives, ruled out the introduction of a Mansion Tax; Chancellor of the Exchequer George Osborne said in October 2012: "We are not going to have a mansion tax, or a new tax that is a percentage value of people’s properties. Before the election they will call it a mansion tax, but people will wake up the day after the election and discover suddenly their more modest home has been labelled a mansion."

On 14 February 2013, the Labour Party leader Ed Miliband said that he would, if in government, introduce a mansion tax and then re-introduce a ten pence tax rate for low earners. However, there was no commitment to put this policy into the Labour Party manifesto and there was also criticism of the fairness and practicality of the proposal. However, Miliband reiterated this policy proposal at the 2014 Labour Party Conference and it is now a firm commitment. Labour claimed the policy would raise £1.2bn a year which would be used to fund the National Health Service. Based on an estimated 100,000 homes valued over £2m, this means each property would be liable for an average bill of £12,000.

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