At this week’s Labour Party conference, Ed Miliband outlined plans to introduce a mansion tax on properties worth over £2m.
But tax specialists Baker Tilly have now done some sums and say that the cost to individuals and their employers of the proposed mansion tax are beginning to become clear.
Miliband forecasts that his ‘mansion tax’ will raise at least £1.2bn a year which will go to the NHS.
In a curiously vague interview on Radio 4, the shadow health minister said it could well be more, but Baker Tilly has done its sums based on raising £1.2bn.
According to Zoopla, in the UK there are 108,000 homes worth more than £2m. This means that the mansion tax would have to raise an average of £11,111 per home per year to meet the £1.2bn target.
Fine, says Baker Tilly, but how much could this actually cost a top-rate taxpayer and their employer?
Yesterday, Miliband confirmed on the Today programme that Labour would reintroduce the 50p tax rate.
So this would mean that, to accumulate an extra £11,000-odd per year to pay the mansion tax, a top-rate taxpayer would have to earn an additional £22,917, of which £11,459 would be deducted in income tax, and £458 in class 1 NICs.
Employers would also have to play employer’s class 1 contributions of £3,162.55.
So that’s a total of around £26,000, all of which would be payable to HM Treasury in four separate ways.
Clearly that’s something else, along with immigration and the national deficit, that Miliband forgot to mention in his speech…
Comments (1)
Usually it's fine to illustrate a point with hypotheticals, but let's get real… very few people who own a £2m+ house pay National Insurance Contributions. They get paid smarter than that. Usually dividends, which aren't subject to NIC. The Mansion Tax is a daft idea, not because it is unfair and divisive, but because it won't raise very much money at all, but will cost a lot to administer. If the Central Government (run by a Labour majority from 2015) wants to tax property wealth, they should scrap council tax (which costs an inordinate amount to collect) and Capital Gains Tax (which is just a way for the most wealthy to pay a lower rate of income tax) and Corporation Tax (which is just a way for companies to pay a lower rate of income tax). Replace all these nonsense taxes (including NICs) with a simple tax on all income (no, you can't reduce the amount with 'expenses') and a simple flat tax on all property value (including cash, shares, art and of course property). This way, you could set the rate at an ultra low 3% on both taxes, and still raise the £340bn+ that those taxes currently raise.