Saturday, 23 August 2014

Going down bleating.

An orgy of shroud waving in yesterday's Evening Standard, here are some of the punchlines:

Londoners were asked if they thought they would have to “pay more” under a mansion system advocated by Labour and the Liberal Democrats.

The results show that 15 per cent believed they would — despite only two per cent of the capital’s homes being worth more than £2 million. The poll also showed 49 per cent of Londoners “strongly” or “tend to” support the idea of a mansion tax while 18 per cent are opposed...

A spokeswoman for Mayor Boris Johnson said many pensioners would find a mansion tax “devastating”. Shadow Chancellor Ed Balls has indicated low-income pensioners would be allowed to postpone tax payments until they, or their heirs, sell the property. A Lib-Dem spokesman claimed there was “overwhelming support among Londoners” for their proposals.

But pensioners Tim and Penny Hicks, who bought their house in a former slum area of Notting Hill in 1968 for £11,750 and now see it worth an estimated £3 million, said a mansion tax would be “iniquitous”.


Bayard said...

Quick now, Penny, bump off Tim
and you can be a real live PWIM.

My answer to these idiots would be, "you want to avoid the Mansion Tax? Simple, just value your house at less than £2M. Of course neither you nor your heirs will be able to sell it for more than the valuation, but hey, it's worth £1M to avoid an iniquitous tax isn't it?"

Mark Wadsworth said...

B, yes, there is an element of that with the ATED mansion tax lite.

The owner has to pay a small % of the current market value and is liable to capital gains tax in future.

But the allowable base cost amount which you can deduct from future selling price to calculate the CGT is the current market value.

So a higher agreed current value = more annual tax, less CGT. A lower value = less annual tax but more CGT.

If you set the rates correctly, most people will agree a fair value, and even if not, they still end up paying the same tax overall.