Mansion Tax could be ‘fiscal dragged’ into becoming another mainstream property tax
Mansion Tax could be ‘fiscal dragged’ into becoming another mainstream property tax, say leading audit, tax and business advisory firm, Blick Rothenberg.
Mark Cunningham, a partner at the firm, said: “There is a clear potential for fiscal drag to ‘silently’ bring more and more properties into the Mansion Tax net over time, unless the value thresholds are increased to take account of inflation. Otherwise, Mansion Tax could start to become less of a tax on exceptional properties and more like part of the mainstream property tax system.”
He added: “The government is reported to be considering reducing the Mansion Tax threshold from the originally proposed £2m to £1.5m. A reduction would capture significantly more of the property market, and this would only increase as fiscal drag comes into play.”
Mark said: “Properties are currently expected to be revalued every five years, while the charges themselves will increase in line with Consumer Prices Index (CPI) each year. However, there is no automatic indexation of the property value thresholds. Instead, the Government has said that decisions on whether to uprate the bands will be taken alongside each revaluation and therefore left to future governments.”
He added: “Once the government has established the infrastructure to regularly identify and value higher value properties, adjusting the thresholds or rates in future also becomes much easier.”