Fresh UK Mansion Tax Proposals

The Liberal Democrats are pushing to introduce a “mansion tax” as part of the debate on scrapping the top 50p income tax rate

London, UK (Pryce Warner International) August 18th, 2011 – Chancellor of the Exchequer George Osborne has called for the end of the top 50p tax rate, citing that it does not bring in enough additional revenue when weighed against its cost to Britain’s competitiveness.

Their junior partners in the coalition are now pushing to introduce a “mansion tax” on properties valued at over £1m as a means of making up the shortfall in government revenue.

The proposals would involve implementing a capital gains tax on any income earned from the sale of properties worth over £1m.

Initially raised at their party conference two years ago, the idea of a “mansion tax” has been around for some time yet has so far failed to make any serious headway in the coalition’s approach to taxation.

At present the 50p tax rate applies to anyone earning over £150 000 per year but a recent enquiry has suggested that it fails to bring in much additional revenue and has a far more detrimental impact on the competitiveness of the UK as a location for international businesses.

With the Eurozone in a state of crisis and uncertainty, it is hoped that abolishing the top rate of tax will help spur growth and investment into the UK.

During an interview with BBC radio 4 Chancellor George Osborne commented: "I've said with the 50p rate I don't see that as a lasting tax rate for Britain because it's very uncompetitive internationally, and people frankly can move. What is it actually raising?"

With such a clear signal that the top rate is to be removed, Lib Dems are beginning to push for an alternative. Business Secretary Vince Cable has so far been the most vocal about the need to introduce some alternate form of taxation on high earners. He has also explicitly stated that a “mansion tax” would be a good alternative as it affects top earners and will also ensure increased revenue.

David Retikin, Director of Operations at Pryce Warner International, a Financial Services Provider for Expats, commented: “The present 50p tax rate is important in that it ensures high earners pay their fair share. However, if it is shown that the 50p income tax rate does not earn much additional revenue and that it drives companies out of the UK, then some alternate form of taxing high earners should be considered. Current British Expats may own property that fall under the proposed “mansion tax” and as many sell their homes before moving abroad there is the potential that many future Expats will be affected as well. Anyone concerned about the potential loss of income this may induce should speak to independent financial advisors to discuss what options may be available to them as Expats to make up the shortfall.”

Pryce Warner International Group provide International Asset & Investment Management, Independent Financial Advice & QROPS Overseas Pensions.

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By: Aneil Fatania
Financial Editor
Pryce Warner International Group
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