Psst wanna buy a mansion....

In theory it seems a good idea. Mansions are a sitting duck - you can't exactly hide them. I suspect Vince Cable has not realised that mnay 3 bed semis fall into his likely definition of a mansion. It'll push down house prices , reduce stamp duty take and reduce funds levied by the mansion tax itself . Bad idea Mr Cable . Drop your ideology and think of something more workable.

Comments
ShirleyM's picture

Call me a cynic but ...    1 thanks

ShirleyM | | Permalink

.. if anyone can afford to maintain a £2M mansion/semi-detached then they aren't short of a bob or two. If they currently don't pay tax, then they would be worse off, but they have the option to sell which is what happens to lots of less well off people who retire and their state pension isn't enough to keep their current home so they sell and move into something smaller or rent.

If they have a £2M semi they must live in high value area so they have the option of moving up north where they could get a real mansion for that money :)

Old Greying Accountant's picture

You're a cynic Shirley :o)

Old Greying Acc... | | Permalink

ShirleyM wrote:

.. if anyone can afford to maintain a £2M mansion/semi-detached then they aren't short of a bob or two. If they currently don't pay tax, then they would be worse off, but they have the option to sell which is what happens to lots of less well off people who retire and their state pension isn't enough to keep their current home so they sell and move into something smaller or rent.

If they have a £2M semi they must live in high value area so they have the option of moving up north where they could get a real mansion for that money :)

Let us take Sandbanks, at the mouth of Poole harbour.

When my God mother moved down to near there some 30 - 40 years age it was a bare spit of wasteland and plots sold for a few hundred pounds. If you had moved there and had a modest 3 bed house it would now be worth £4 - £6 million. Running costs would be no more than any other 3 bedroom house and you could quite easily be living on a state pension.

This is an extreme area, but in the south east there are many areas where houses will be over £2 million but after mortgage and running costs there is not much left in the kitty for the green eyed socialists. Further more, due to the mess caused by the banks and the labour party you will be unlikely to take the action you suggest as a) no one would want to buy it and b) you wouldn't get a mortgage to move any way.

Still, I suppose you could always rent it to the council so they can house the poor hard done by immigrants (illegal or otherwise)!

Hot off the press - especially in view of the letter today informing me our mortgage rate is going from 3% to 4.5%, wish I could put my clients' fees up by 50% like that!! 

What has this subject to do with Immigration?

anzanijohn | | Permalink

Old Greying Accountant wrote:

Still, I suppose you could always rent it to the council so they can house the poor hard done by immigrants (illegal or otherwise)!

Perhaps you could explain what relevance your gratutious remark about Immigrants has to the question of property based taxation?

Without such explanation you invite the conclusion that it simply exhibits a considerable degree of bigotry which may be felt to be in some contrast with pictures of nice scenery and poems.

Other side of the coin ..

JC | | Permalink

@Old Greying Acc...

'.. Hot off the press - especially in view of the letter today informing me our mortgage rate is going from 3% to 4.5%, wish I could put my clients' fees up by 50% like that!! ..'

And what about the savers/pensioners who have been sacrificed to achieve absurdly unrealistic low interest rates as well as QE hanging them out to dry?

http://www.telegraph.co.uk/finance/personalfinance/savings/9010359/Savers-lose-out-on-44.5bn-as-Bank-Rate-stays-at-0.5pc.html

Quote that says it all

Simon Rose, spokesman for Save Our Savers said: "It is unfair: to confiscate £44.5 billion annually from savers and pensioners and transfer it to those in debt; to penalise those who have struggled to put something by in order to support those who ran up debts and caused this financial crisis; to reward debt and penalise savings."

Would seem as though those who have debt are treated better than the prudent - mmm....

Essentially this mortgage rise has been brought about by savers becomming fed up with underwriting everyone in debt. Boils down to market forces, savers are not lending money to the banks at 'no interest' and this mortgage hike is so that the banks can attract funds to lend - expect most of the savers would love 4.5% or even 3%

Recessions are all about weeding out the strong from the weak and profilgacy leading up to the current situation should not be rewarded at others expense. The trouble is that when govts. start interfering with the markets (for whatever reason) all that happens is a marginally softer landing at the time but prolonged agony for all over a greater period and inevitably one sector of the community is hung out to dry - generally those percieved as having the cash to bail everyone else out

Old Greying Accountant's picture

You say bigotry ...

Old Greying Acc... | | Permalink

anzanijohn wrote:

Old Greying Accountant wrote:

Still, I suppose you could always rent it to the council so they can house the poor hard done by immigrants (illegal or otherwise)!

Perhaps you could explain what relevance your gratutious remark about Immigrants has to the question of property based taxation?

Without such explanation you invite the conclusion that it simply exhibits a considerable degree of bigotry which may be felt to be in some contrast with pictures of nice scenery and poems.

... some would say satire!

If you want a bigot, look at Mr Cable.

I have no problem with immigrants who seek to work hard and earn a life for themselves.

I have big issues (no pun intended) for those who come here with the sole aim of milking the system.

I am quite happy to add "the indiginous work shy scroungers" to the list of would be tenants.

Old Greying Accountant's picture

I don't disagree in essence ...    1 thanks

Old Greying Acc... | | Permalink

JC wrote:

@Old Greying Acc...

'.. Hot off the press - especially in view of the letter today informing me our mortgage rate is going from 3% to 4.5%, wish I could put my clients' fees up by 50% like that!! ..'

And what about the savers/pensioners who have been sacrificed to achieve absurdly unrealistic low interest rates as well as QE hanging them out to dry?

http://www.telegraph.co.uk/finance/personalfinance/savings/9010359/Savers-lose-out-on-44.5bn-as-Bank-Rate-stays-at-0.5pc.html

Quote that says it all

Simon Rose, spokesman for Save Our Savers said: "It is unfair: to confiscate £44.5 billion annually from savers and pensioners and transfer it to those in debt; to penalise those who have struggled to put something by in order to support those who ran up debts and caused this financial crisis; to reward debt and penalise savings."

Would seem as though those who have debt are treated better than the prudent - mmm....

Essentially this mortgage rise has been brought about by savers becomming fed up with underwriting everyone in debt. Boils down to market forces, savers are not lending money to the banks at 'no interest' and this mortgage hike is so that the banks can attract funds to lend - expect most of the savers would love 4.5% or even 3%

Recessions are all about weeding out the strong from the weak and profilgacy leading up to the current situation should not be rewarded at others expense. The trouble is that when govts. start interfering with the markets (for whatever reason) all that happens is a marginally softer landing at the time but prolonged agony for all over a greater period and inevitably one sector of the community is hung out to dry - generally those percieved as having the cash to bail everyone else out

 

What is wrong is the size of the increment and the time scale. And if you think it has anything to do with appeasing savers and little to do with boosting profits from a captive customer, and if you think the banks are not already awash with funds then I suggest you take off your rose tinted spectacles.

My view has always been that the base rates should never have come below 2.5/3% or so, but given that it has, and given the state of the economy now is not the time to hike it up. Yes, by all means 0.25% at a time over a period.

The problem is that it has been so low for so long there are people who bought in at that rate and have budgets to match and a 50% rise in mortgage interest to many wil be the final straw and house prices will fall, repossessions will accelerate and in due course businesses will fail and unemployment will rise.

Fact is, many who will fail have not been profligate, but have had to take on debt through necessity. The root cause of all this is the banks and as ever they will continue. Most people just want a house and a mortgage they can afford, and they will be the ones who loose out, especially as the buy to let market will blossom, even though it was the buy to let landlords that were the biggest contributor to house price inflation and the cause of ordinary modest folk being forced to take mortgages at the then limit of their means, the alternative being to rent the same house at a level above their mortgage..

On a personal note, it is annoying, but still below the level when we took out the mortgage, but many are not so fortunate.

 

ShirleyM's picture

ok - what about taxing second homes?    1 thanks

ShirleyM | | Permalink

Given that there is a shortage of housing would taxing of second homes be more aceptable to more people? Nobody can live in 2 houses for more than 50% of the time ;)

So lets tax them to the hilt, then there will a mass sell out and then prices will drop, and the people who currently can't afford homes will then be able to buy one, even with a higher rate mortgage :)

Whatever we do, there will be winners and losers, but I can remember the days when high rate tax was 80%, so 50% doesn't seem too bad, especially when the 'entrepreneurs' can easily avoid it. It is the employees who have to pay the 50% tax, and they don't as a rule help the economy by providing jobs for people.

Old Greying Accountant's picture

Now you're talking ...

Old Greying Acc... | | Permalink

... but 2 per person, so one each for husband and wife.

(EDIT I obviously meant one per person, so 2 for a couple!)

Personally I would like to see something where buy to let is treated as a tax "scheme" for want of a better word, so that if you buy a buy to let the stamp duty is hefty, say 20 - 25% and you sign to say you are buying to live in to get reduced rate, and if you let it out within a period further stamp duty is payable over a period (5 or 10 years say) on a sliding scale like the 7 year rule for IHT.

Then, income deemed as a buy to let scheme should be should be taxed at say 50%, no problem with that, and interest relief should be restricted to the lesser of 50% of the original purchase price or the actual interest on the mortgage specifically for the purchase of that property.

Harsh, but it might give the first time buyers a chance without selling their souls to the devil.

Flying Scotsman's picture

Mansion tax

Flying Scotsman | | Permalink

Wow . Looks like I 've rattled some cages BIG time .

I appreciate the argument about selling up and downsizing but it seems awfully harsh for a retired

couple who have lived in their home for 40 years on a modest income , bearing in mind it is a

means to tax the rich and this sort of effect is not simply unfair it is akin to harrassment at best .

An increase in stamp duty and  a charge on the seller seems the fairest (not sure if best)

way to get teeth into expensive properties. It will also bring larger sums quicker I suspect.

As soon as the couple above sell voluntarily and pocket £2m they will be "rich" so are fair game

QED

 

 

 

ShirleyM's picture

@Flying Scotsman    1 thanks

ShirleyM | | Permalink

This is where we part company on our views. I am not saying it is fair ... there are always winners and losers, but people living in very expensive homes are very unlikely to be on their 'uppers' and if they are on their uppers I would expect them to release the capital from their assets like everyone else has to when their living costs go up, but their wages don't.

Selling homes because they can no longer be afforded isn't the prerogative of the 'previously' rich. It happens to people everywhere, all of the time. It sounds like you think the people living in very expensive homes should be protected from the realities of life!

Note: I am not saying I agree with the mansion tax specifically, just that it would be advisable to have something to replace the 50% tax that is going to be scrapped, because the few that pay it have loud voices. No doubt we will get exactly the same result with the mansion tax.

How many mortgage holders know or care ...

JC | | Permalink

@Old Greying Acc...

and just to take it a step further - provided people can get a mortgage to buy a house (their right ?) do they really care who makes the sacrifices in order for this to occur?

For instance, let’s not forget that artificially low interest rates affect the Government Gilt rates which in turn are the benchmark for pensioners GAD rates

Quite apart from the fact that the Government has just reduced GAD ratio from 120% down to 100% so pensioners have just taken an instant cut in income of 20%

So much for the 'fair society' which seems to be as much about 'screwing' those who are most vulnerable because they have no trades union to hold the country to ransom

Which other sector of society has been forced by the Government (without meaningful consultation) to:

  • Get no return for their savings
  • Bail out those in debt
  • Take a (non-negotiated) reduction in income of 20% (try doing this with the public sector and watch the outcry)

and at a time in their life when they are most vulnerable and cannot go back to work to supplement this loss

One of the benchmarks of a civilised society is to look after their old & infirm which clearly seems to escaped the Governments radar

Flying Scotsman's picture

Mansions and 50p tax

Flying Scotsman | | Permalink

There is something very special about one's home so being forced into moving out is a major trauma , exacerbated by the fact that many who would be hit are elderly. The consequences of such a move (no pun intended) can trigger the beginning of the end. As a debt counsellor I have sat across the table from many people who are forced to sell and downsize to avoid repossession and others who have got repo orders - I have been to court and pleaded with judges. It is simply something too basic to the human condition to force people to downsize with a tax. When I say "fair" I mean something that goes way beyond conventional notions of fair and unfair. Of course those who benefitted big time in the boom years have to help bale us out and the more they made the harder they must bale.Mr and Mrs Pensioner probably didn't make it big time - they worked hard and saved over 40 + years and had the good fortune to live in the correct postcode.Life is a postcode lottery - health and now wealth

ShirleyM's picture

So, is the 50% tax the best solution?

ShirleyM | | Permalink

The mansion tax is only being considered because of the complaints from the people who pay 50% tax and the government want something to replace it.

What solution do you suggest, if any?

See this solution ...

JC | | Permalink
Flying Scotsman's picture

50p tax and mansion tax

Flying Scotsman | | Permalink

Interesting you note that the 50p rate is up for review because those that pay it are grumbling. Most people grumble about tax on fuel but nobody is suggesting much beyond tinkering at the edges with  the escalator increase. Also , many of those on 50p probably have humungous mansions worth a packet and although it may cost them a few bob it is less than the 50p rate presumably . So if such a tax came in it would be pandering to the wealthy and cripple many caught in the crossfire. Don't make political sense.

I prefer what I set out above on the transactional aspect. Nobody "innocent" gets hurt unfairly. Sorry to use the "f" word again.

The big question is whether any special tax imposition targeting a class of wealth is being done for political ends or whether we need to examine the best economic arguments and strike balance between the two.Rich people shoudl remain rich - why not ? It is not a crime. By the way I do not consider myself rich but I am not envious of large wealth. That'slife - some have got it some have not. I do believe in chipping in and those with more should chip in more but they should not be targetted and certaintly not with a scheme that will wreak a lot of collatoral damage.

Everybody agrees that punishign wealth is bad for economies and the people on the bottom suffer most when there is a lack of investment and economic growth , which is driven by wealthy people.

 

 

Flying Scotsman's picture

50p tax another idea

Flying Scotsman | | Permalink

I have had another thought. Why are gambling winnings tax free ? Because it is taxed at the point of the flutter being placed. Has anybody done the sums to see if it would be better to tax the winnings instead (or as well as) ?

I declare an interest - I do not gamble.

Old Greying Accountant's picture

Ah but Shirley ...

Old Greying Acc... | | Permalink

ShirleyM wrote:

This is where we part company on our views. I am not saying it is fair ... there are always winners and losers, but people living in very expensive homes are very unlikely to be on their 'uppers' and if they are on their uppers I would expect them to release the capital from their assets like everyone else has to when their living costs go up, but their wages don't.

Selling homes because they can no longer be afforded isn't the prerogative of the 'previously' rich. It happens to people everywhere, all of the time. It sounds like you think the people living in very expensive homes should be protected from the realities of life!

Note: I am not saying I agree with the mansion tax specifically, just that it would be advisable to have something to replace the 50% tax that is going to be scrapped, because the few that pay it have loud voices. No doubt we will get exactly the same result with the mansion tax.

... their living costs are not going up, their tax is, punishing them for a modest and prudent life to bail out the profligacy at the extreme ends of the spectrum by the bone idle scroungers and the grasping greedy rich, who will no doubt  find ways to avoid the tax anyway.

ShirleyM's picture

Not a bad idea!

ShirleyM | | Permalink

Why are winnings and games of chance tax free? If you deduct the cost of entering the race/lottery/bet, etc. and then tax the difference. Look at all the millions won on the lottery!

It would also stop the 'cash in hand' guys ad the criminals to a certain extent, as they aways claim the large banking/wads of cash in their pocket is 'winnings' ;)

Old Greying Accountant's picture

JC - not quite sure what your bleat is?

Old Greying Acc... | | Permalink

I thought this was a thread about the proposed mansion tax and possible alternatives!

I'm not quite sure why you have seized on my throw away comment about interest rates as an excuse for a rant, which if you want to continue all well and good, but you might like to consider starting your own thread to do so as you are muddying the waters here somewhat.

Old Greying Accountant's picture

I think ...

Old Greying Acc... | | Permalink

Flying Scotsman wrote:

I have had another thought. Why are gambling winnings tax free ? Because it is taxed at the point of the flutter being placed. Has anybody done the sums to see if it would be better to tax the winnings instead (or as well as) ?

I declare an interest - I do not gamble.

It is probably swings and roundabouts - last time I had a flutter (many years ago) you had the option to pay tax when you placed the bet, or after you won (ha ha).

I would hazard that the value of bets placed far outweighs the value of payouts (else there would be no bookies!) so taxing the bet I imagine raises more than taxing the winnings.

 

ShirleyM's picture

@OGA

ShirleyM | | Permalink

You are nitpicking  .... now there's a good Yorkshire phrase for you :)

Yes, it would be tax rather than living costs, but the same principles apply. An expensive home is a choice, not an entitlement. Why should the house next-door, which may be only half the value, pay the same rates as the mansion? The mansion dwellers could choose to live next door in the cheaper house if they object to paying more than the people in less valuable properties. There are two sides to every coin.

Anyway, as I keep saying, I don't think a mansion tax is the solution ... I think the 50% tax rate should stay for a while and the whingers told to tighten their belts until the country is back on it's feet!

Old Greying Accountant's picture

Shirley ...

Old Greying Acc... | | Permalink

ShirleyM wrote:

Why are winnings and games of chance tax free? If you deduct the cost of entering the race/lottery/bet, etc. and then tax the difference. Look at all the millions won on the lottery!

It would also stop the 'cash in hand' guys ad the criminals to a certain extent, as they aways claim the large banking/wads of cash in their pocket is 'winnings' ;)

... on that basis I should be able to claim my weekly national lottery as a tax deduction, if not why should I only be able to off-set the expense on the week I win.

My bottom line is that government is corrupt and incompetent and it is better to encourage spending and investment and leave people with choice, I strongly believe that the higher the tax demand the slower cash cycles so the actual tax take will decline.

I also believe in a level playing field, and if we refused to import goods that were not made under the same regulations as our own it may help rebuild our economy - but I suppose if people want to wear clothes made by eight year olds on a subsistence diet working 16 hours a day in a factory pumping out more pollution than the whole of Europe that is their choice.

In response to your 'bleat' ...

JC | | Permalink

@Old Greying Acc...

Forgive me  but thought your comment 'bleat' started the 'off-topic'

'.. Hot off the press - especially in view of the letter today informing me our mortgage rate is going from 3% to 4.5%, wish I could put my clients' fees up by 50% like that!! ..'

Very simple - if one doesn't want a response then withold the comment in the first place

Old Greying Accountant's picture

If you can't tell the difference ...

Old Greying Acc... | | Permalink

... between a bleat and a throw away comment you should get out more, preferably not to Wales or you might get too confused.

ShirleyM's picture

lol @OGA

ShirleyM | | Permalink

You are getting on your soap box, and I am likely to follow your example ;)

There is so much wrong with this country. I think honesty, respect, fairness, and compassion disappeared a long time ago. Now it is dog eat dog and grab what you can while you can. The greedy and the ruthless are held up as examples to us all, and the non-greedy people are actually seen as mugs and not worth any consideration!!!

Oops ... better stop here ... the soap box is tempting me so!

Gaming - tax at both ends ...

JC | | Permalink

What are we saying here - taxing the stake or the winnings or both (double taxation)

In theory with lottery style gaming, winnings are paid out of stakes which have already has tax paid. So 100 £1 stakes = £100 win and all tax has already been paid at the outset. So its either 100 £1 stakes @ 0.30p or £100 win @ 30% - the same, no tax gain (neutral)

The fact that lots of punters have paid the tax at the time of placing the bet rather than a single winner is immaterial

Alternatively subject the winner to income tax rates 50% - now that would be a tax gain (50% - gaming stake tax 20%?). But presumably no tax on the original stake

ShirleyM's picture

I don't think we are saying anything definite JC

ShirleyM | | Permalink

We are just discussing the possibilities and the outcomes.

OK, that is actual betting covered, but what about wins from casinos, the lottery, premium bonds, etc. I don't think any of that is taxed, is it?

Call me naive but I don't see why the 50% tax is causing such an uproar. I doubt very much that any of the 'wealth/job creators' are paying it! Maybe they should just bung the tax rate back up to 80% for a while, and then when it comes back down to 50% they will realise things could be much worse.

@OGA ...  you will possibly comment on governments wasting money and that tax should be kept as low as possible ... and I agree, but that is a pipe dream and will never happen .... so what should be done instead?

 

Flying Scotsman's picture

Tax...you bet !

Flying Scotsman | | Permalink

Why not tax at both ends and double the take as per your example ?

And on big payouts , say £5m + , have tiered rates up to 50% . Most big winners seem to be ordinary folk who aren't likely to change their lifestyle too much so they won't miss a few bob and are hardly in a position to moan

It is so obvious I don't understand why winning are such a sacred cow 

Economics of Supply & Demand means that if more immigrants come

dstickl | | Permalink

RE anzanijohn's Q: What has this subject to do with immigration?

anzanijohn wrote:

Old Greying Accountant wrote:

Still, I suppose you could always rent it to the council so they can house the poor hard done by immigrants (illegal or otherwise)!

Perhaps you could explain what relevance your gratutious remark about Immigrants has to the question of property based taxation?

Without such explanation you invite the conclusion that it simply exhibits a considerable degree of bigotry which may be felt to be in some contrast with pictures of nice scenery and poems.

The Economics of Supply and Demand means that if more immigrants were to come to England, then the Demand for property goes up, then prices of houses etc in some areas goes up too, then the taxation on some property would go up too, because some people from the wonderful Sir David Attenborough downwards seem to me to have the opinion that England is currently overcrowded and overpopulated, and so does not need any more net immigration, because the Supply of houses etc is limited.

daveforbes's picture

Alternative proposals

daveforbes | | Permalink

Proposal:

Many tax payers reduce their tax bills using cunning schemes. This loses the treasury much revenue and is very unpopular amongst the voting public. Rather than criticise the "users" of such schemes, surely it is the "dealers" that need to be targetted. These schemes are devised by accountants and tax professionals so  I propose a 15% income tax surcharge on anyone working in the accountancy profession. Much fairer surely than picking on the 1% minority of high earning tax payers who already generously provide 30% of the income tax total or the guardians of the nation's large country houses. Just to ensure the popular vote, estate agents (stamp duty schemes) and traffic wardens (working on it) could be included.

Thoughts ?

ShirleyM's picture

Hehe

ShirleyM | | Permalink

Only if we can include bankers, solicitors, and 'Insurance' salesmen in that group :)

Old Greying Accountant's picture

How about software houses ...

Old Greying Acc... | | Permalink

... for bunging out half completed software and letting the accountants de-bug it for them!

I have many axes, all needing a good sharpen - :o)

I wonder how many of the 1% stated are accountants peddling tax avoidance schemes, just a thought?

I think the brush is too broad, if things were tweaked so you had to register to sell teh tax schemes that have to be notified to HMRC, then may be have a surcharge, but most accountants (and most of their clients) want to pay the right tax in the spirit of the law and have no deire or interest in tax avoidance schemes.

A listen to last week-ends Moneybox Live from Radio 4 is well worth half an hour of anyones time.

ShirleyM's picture

Who actually decides tax law?

ShirleyM | | Permalink

I am sure it isn't MP's. Which of the big 4 advise them on what to do and do you think they will give all taxpayers equal consideration?

If you think this is too far off topic just say so, but someone must have advised them of a mansion tax in the first place, so who was it, and why did they think it was a good idea?

Flying Scotsman's picture

Migrants and mansions

Flying Scotsman | | Permalink

If we formed a new country today and had to devise the tax code from scratch I have little doubt that it would be simple if it was written by independent technocrats.

The reason why it is so complex is partyl due to the the fact that it has developed piecemeal often in a reactionary manner. That is fertile breeding ground for wheezes, schemes and loophole

On the subject of immigration it is a matter of sorting the mickey-takers from the genuine worker who wants a chance to better himself or herself. British natives do not like doing dirty menial and backbreaking work so somebody has to do it. Perhaps charge them an entry fee or higher rate of tax for the privilege of being here.

In the good old days before the welfare state if you didn't work you starved and if we did not lavish benefits in migrants we would save a packet and have the work done, meaning every migrant is working or doesn't come- quite efficient is it not ?

 

 

 

 

 

ShirleyM's picture

Australia has stricter entry codes

ShirleyM | | Permalink

I know you have to have some income organised before you can emigrate to Australia, but what happens if, once you get there, you lose your job? Do they send you back, give you benefits, or do you rely on savings, charities and such like?

Flying Scotsman's picture

Mansions and immigrants

Flying Scotsman | | Permalink

I would imagine they only issue a limited visa and don't give benefits. They do have such things here but it so easy to circumvent and disappear into the cash economy

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