Tory conference: Mansion tax ruled out

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Rachael Power
Community Correspondent
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Chancellor George Osborne dropped some finance-related bombshells this morning at the annual Tory conference, including ruling out a mansion tax, a £10bn reduction to the welfare budget and a new employee-owner share scheme. 

Read on to find out some of the key changes proposed ahead of the 2015 elections, and what AccountingWEB members think of the Chancellor's speech. 

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  • Mansion tax
  • £10bn welfare budget cuts
  • Employment law reforms

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About Rachael_Power

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09th Oct 2012 13:10

Oh George....

did no one mention the various share schemes already available....and its gonna cost £100mil crazy waste of money

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09th Oct 2012 13:53

Gideon is clearly barmier than we thought; Asking workers to give up their employment rights so that they can have shares instead.

Most companies will be in financial difficulties when they choose to reduce headcount. The value of shares will also reduce given the financial condition of the company, .... so this is supposed to be an incentive how, exactly?

Oh, sorry...I misunderstood his intentions -  it is an incentive for all his buddies looking to find new ways to dispose of staff quickly and cheaply, not an incentive for the working person. In that case what a smart person he is!

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09th Oct 2012 15:44

What mansion tax - or a fair payment amount ?

Are we saying that paying a fair proportion on your house rates band is acceptable then ...

Why do the Candy brothers on a £120m property potentially have the same rates bill as a property worth £500k - clearly one (the less expensive) is subsidising the more expensive property because rate banding has capped the cost to the higher value property rather than reflecting the true situation

Ergo: the 'less well off' (all relative) are proportionally underwriting the more expensive properties

Fair & equitable or not?

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to Slim Freddie
10th Oct 2012 13:39

Mansion tax

We seem to have forgotten Household Rates were NOT A NATIONAL TAX RAISING device, they are a payment for common services used. If a £120 million house has the same number of occupants as a £500k house, why should the more expensive house pay more? OR if you want more equity in a Mansion Tax, lets introduce a sliding scale so those who lived in it for 30 years pay nothing, those of 20 years .005 % and so on so those moving now pay the real problem of complexity is there, I mean houses do not move do they?

If Denis Healy (real labour, real intelligence, real honesty) thought it not worth the hassle, we should all learn from him. Lib Dems just get a life!!

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09th Oct 2012 18:08

This guy is their biggest liability!

First we get the botched Budget.  As already spelled out on here, RTI is likely to be one Almighty mess visible to the voters by Election day.  Then we get this stupid speech.

Here's a great idea:

Why don't we get workers to give up employment protection in the middle of a big recession in exchange for non-quoted highly illiquid shares?  And at the same time, let's ask small business owners to give the same shares to the aforementioned workers, with all the hassle and adminstration that having a bunch of small shareholders involves?

Did this Wally ask any small employers or their employees about this?  I can see at most 1% of either group wanting to go for it - those who are too dumb to figure out the implications.



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By markfd
10th Oct 2012 09:02

Seeing as it's obviously so easy... create a business, employ people and make loads of money, why don't you keyboard warriors above just do so?

The local tax is supposed to cover local services so yes it's perfectly fair that people in expensive houses don't pay a multiple of those in cheaper ones.

Why not have a wealth tax as originally proposed by the Libdems - 0.5% of assets over £1m.  To be fair though this must include all assets, including the actuarial value of public sector pensions.  So a PS worker with an index-linked pension entitlement of £40k pa living in a £500k house in the SE will be paying about £5k pa extra in wealth tax.  Seems fair to me.

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10th Oct 2012 10:47

Rates raised but allocated elsewhere ...

'.. The local tax is supposed to cover local services so yes it's perfectly fair that people in expensive houses don't pay a multiple of those in cheaper ones ..'

Unfortunately in reality this does not happen & rates seem to operate on a 'rebate' system - don't know current situation but under last Government only about 0.30p in every £1 raised by rates in S.East was spent locally and the balance of 0.70p was remitted to subsidise rates in the North of the country (votes heartland - who said Baksheesh was dead?)

Clearly the majority of rates money is not being used locally!

On the other topic - £40k public pension in terms of a SIPP pot is £730,000 (ex indexation) which would generate £40,150 at todays drawdown limits. Could these workers in the public sector ever have had a reasonable expectation of creating a lump sum of this size if it was not underwritten by the taxpayer? So when taking assets into consideration .....

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to I'msorryIhaven'taclue
10th Oct 2012 17:03


I'm not quite sure where you are getting your pension figures from but you're both way off the mark.  You would need a pension fund of around £830,000 to produce an income of £40,000 on current GAD rates for a 60 year old male, (without taking account of the tax free cash) but comparing an index linked pension to the income provided by max GAD rates is about as accurate as saying that something that costs £100 has the same value as something that costs $100.

To provide a £40k index linked pension with a 50% spouses pension to the average 60 year old would cost around £1.7m plus the average public sector pension would also have tax free cash of at least £120k, giving you a total value of around £1.82m

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10th Oct 2012 11:48

Local taxes don't cover the cost of local services

JC, I think you are wrong. 

Rates and Council Tax only cover part of local government expenditure.  The rest comes from central government.  (Used to be called the Rates Support Grant, but probably something else now.)  While I have no doubt that Council Tax funds a greater proportion of local govt services in some areas than others, there is still plenty of scope for adjusting the levels so that owners of big Southern houses pay more, without them actually subsidising Northern councils. 

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By kfatax
10th Oct 2012 11:49

By George:

£10 billion cut in welfare budget is harsh. Why not leave the EU and solve all sorts of problems at a stroke

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10th Oct 2012 11:55

Fair, just and reasonable...

Why do the poorer, less productive, less successful, less motivated down to the downright evasive/lazy, seem to think it is their god-given right to receive money from the better off, as if the better off have a bottomless pit of money to draw from to pay for it all?

Tax the 'rich' too much and they will either stop bothering to work 18 hours a day 7 days a week or they will relocate to somewhere where they actually get to keep at least some of the money they have made.

If you generate more money you shouldn't be penalised by having to pay ever more tax to subsidise Labour's ideas for a 'fairer' society, which seemed to envisage some utopia where tax credits and hundreds of other unfunded bottmless benefits would allow everyone to drive new cars, own houses, have mobiles, tv, etc and come to think of them all as their god-given RIGHTS.

I have no problem in society supporting people who need it to live, ie money for food, but when I see people on benefits able to drive a car, own a house, own a mobile, drink and smoke at our expense something has gone seriously wrong.

Whole Government needs to be redesigned, but isn't going to happen as the people tasked to do it would be the civil servants and we can already see how the self serving interests are trying to destroy UC.

If you want to raise taxes on properties (apart from the huge drag stamp duty already causes- who's crazy idea to put this on PURCHASE instead of sale.???) then redesign the rates system on the American model, where local communities charge a property tax which pays for the local services- police, fire brigade, etc and scrap council tax.

But make it so this money stays local, then locals will be able to decide what the rate is for a given level of service.  When you can directly see the cost of the services you will soon want to make them as efficient and streamlined as possible.

Problem solved.  Time wasted, as no one wants to commit political suicide to actually change the country for the better, but will instead tinker around the edges blocked by civil servants (4 or 5m of them...).

Forgot to mention the EU- who are once again looking for a huge budget increase- how much more divorced from reality can they get?

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10th Oct 2012 12:20

@ian...only trouble is

that the £10billion (or however much it is) is often spent in the local community (on fags[***]/booze etc...keeping the local shops going)....I am afraid that the more affluent amongst us spend money further away (or indeed abroad).  Not an answer to the problem, but by not spending this money, we are literally drying up the feckless who in reality provide a cash flow for our local communities.


Just something we need to consider.



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10th Oct 2012 12:46

Mansion tax.

As a Tory supporter,(I am too happy, positive and successful to be otherwise) I am in favour of a mansion tax. For many wealthy people income tax is almost elective and it would be easy and fair to introduce an enhanced property tax. Houses do not run away and there is an effective, cheap tax collection method already in place.

Interestingly the share idea was being discussed in our UK office when I was over this week and I was surprised how positively it was viewed. Our UK branch company is new and dynamic and there is an idea from the owners and employees who would like more participation in the company to offer shares and greater participation. It may be more difficult with older companies. The sad news is that we will not relocate the main company to the UK ( around 40 good paying jobs) as the 45% plus NI is still viewed by our directors as excessive and the poor infrastructure, airports etc does not help. Milliband in the wings does no favours for what is a jolly nice country!



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By mjcpage
10th Oct 2012 13:35

Mansion Tax & Council Tax

It seems to me that any additional tax needs to be fairly simple to administer & collect;

The problem with a Wealth Tax is that there are large areas of subjectivity and any general wealth tax will be more trouble than it is worth;  Tax on the bricks & mortar alone is comparatively straight forward - as long as the assessment & collection is done via Council Tax systems and NOT HMRC.  ( Anything involving HMRC will involve adding 500 pages to any Tax Manual and ensure IT meltdown)

Without having to revalue all domestic dwellings, we could simply have new/additional Council Tax bands for properties valued at (say) £1.5m outside London & 2.5M inside London and the Local Councils can collect the cash and reduce their reliance on the Central Coffers.




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10th Oct 2012 14:02

“How can we justify giving flats to young people who have never

“How can we justify giving flats to young people who have never worked "" 

Maybe because its our duty as a civilised society to look after those who are less fortunate than ourselves.

Lets not continue to try to collect more revenue from those who pay anyway and concentrate effort on those who dont pay anything.We all know that HMRC are not fit for purpose, We all know someone who isnt paying their fair share or paying nothing at all. The black economy is rife HMRC have little or no idea how to stop it. Employ more tax inspectors and collectors go out and catch them, collect the tax which will pay their wages and produce massively increased revenue for the government to squander.

Rant over

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10th Oct 2012 14:16

What are taxes if not a payment for common services .....


Surely by common services we mean available to everyone as and when needed - i.e. NHS, benefits, schools etc.

... or are we saying that certain services need to be ring fenced as local and other regarded as national - but realistcally what is the distinction?

Do rates really cover the complete cost of providing local services or are they supplemented by 'tax' raised by other means - if so there is no real difference

Therefore, all levies on ones purse are essentially a tax, however one chooses to name them

Anyway on the Mansion Tax front - amend rates to be a single percentage for all domestic properties (say-0.03%) across the country & use Land Registry lastest purchase price as the value. Easy to implement & collect (cost savings over existing), automatic adjustment every year, no challenge to rv possible, accommodates asset rich/cash poor who have owned their house for x years, collects tax along the way from those using the 'Bob Geldorf' BVI corporate approach .... and so on; also everyone pays the same percent of the last purchase price of their property - voila!

To move on - here is a definition of the poverty line by 'Child Poverty Action Group' -

'.. At CPAG, we consider a better measure to be the income a household has left AHC, as this more realistically reflects the amount of money families and individuals have at their disposal ..'

Figures AHC (after housing costs), family with 2 children = £17,992 - assumed that this is disposable income after mtg, rates, income tax etc. ?

Anyone want to gross this back up to an annual salary assuming mortgage=£1,000pm, rates=£1,200pa & after tax deducted?

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to Chris Mann
11th Oct 2012 08:13

Poverty? You must be oking!


Figures AHC (after housing costs), family with 2 children = £17,992 - assumed that this is disposable income after mtg, rates, income tax etc. ?

Anyone want to gross this back up to an annual salary assuming mortgage=£1,000pm, rates=£1,200pa & after tax deducted?



That will be approximately £44000 then!

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10th Oct 2012 17:25

65 years old - not 60 ...

@Steve Carlson

apologies should have mentioned age at which pension assumed to be taken = 65 .. (confused why 60 is regarded as the norm - although, maybe it is?)

Totally agree about indexation increasing pot considerably - just highlighting it, hence comment '.. (ex indexation) ..'

Nevertheless basic question remains - '.. Could these workers in the public sector ever have had a reasonable expectation of creating a lump sum of this size ..'

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11th Oct 2012 09:04

Higher rate tax payers .....

@Dave Elliott - Thank you

One question - does this notional figure for annual salary of £44,000 mean that under normal circumstances (not benefits) the claimants would be higher rate tax payers?

(BR @ 20%=0-35,000, HR @40%=35,001-150,000)

or have I totally misunderstood the whole thing?

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By markfd
12th Oct 2012 04:54

Pensions...numbers were as follows...

According to website, index-linked annuity rate with 50% widow pension is 3% so £40k requires £1.3m + £0.5m house (ok assumes mortage paid off) plus other savings and assets at 0.5% for value over £1m gives approx £5k.  Not intended to be a precise calculation, just an illustration of the potential unfairness if yet again PS pensions not taken into consideration in tax policy whilst private ones are continually hammered.

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13th Oct 2012 12:24


Pension calculations are extremely sensitive to a number of calculations, and the true value of them is a lot higher than either the CETVs they offer, HMRC valuations for the Annual and Lifetime Allowance or comparisons with index linked annuities. 

Like I said you need to factor in the TCF, and then there are the other benefits such as DIS and ill health retirement, plus public sector pensions also have a much lower SRA of 60 years old.

To put it into context, if you had a £40k public sector pension then you would likely be on a 1/80ths accrual so you are talking about someone with 30 years service on £107k a year which would be near to the figures of your average consultant/GP.

Could they have afforded to build up a pension pot of around £1.5m? In reality no. That would mean that the same doctor would have had to made total contributions of around £27k a year for 30 years, which in their earlier years would have been more than they were getting paid.

Is it right that they get this much? Well I'm on the fence with people with 30 years service as they would have taken often lower paid jobs in exchange for better pension benefits.  Those in the private sector often took higher paid jobs but took the risk with their pensions and job security.  

As things have transpired those who took the risks lost and those who 'played safe' have won a lot more than they thought.  It would be unfair of us as a society now to penalise people for the choices they made 30 years ago, especially if they made a conscious choice to forgo other pay/benefits in exchange for a guaranteed pension.

I think though that the public sector pension reforms haven't gone far enough as they only apply to new members and not to future accruals for existing members.  Now we know how much the pension benefits are costing I think it's ridiculous to keep accruing them as people in the scheme have a choice as to whether they want to keep working in the public sector or not and should be faced with the same economic realities and choices as everyone else.

If you've got someone in the public sector on the old 1/80th accrual with 10 years service on £50k a year then they are accruing £625 per year indexed pension which using HMRC Annual Allowance valuation of x16 (which is lowballing it) would mean £10k of pension benefits accruing in that year (plus TFC, minus e'ee contributions), but if they have a realistic expectation of of doubling their salary net of inflation before they retire then that would mean they would effectively be getting a minimum of £20k pension benefits on a salary of £50k!  To be offering 40% pension contributions is ridiculous and certainly wasn't the intention of any scheme when it started so it beggars belief that we are continuing to pay it now. 

I still can't believe the cheek of the public sector workers for going on strike about pensions when the new system is still a very generous one. If you are on £50k a year in the public sector now and on a 1/60th scheme then you are accruing £832 of index linked pension which x16 is still £13,312 of pension benefit per year.  

Depending on the scheme you would have to make contributions of around 9% or £4,500 a year, but that still leaves £8,812 of employers contributions or 17.6%, plus the value of this will go up in line with career average earnings so you could realistically expect some sort of uplift on this, even if it won't be anywhere near double.  

And people still complain and want to go on strike about this?

Sorry rant over now on public sector pensions!

Back to the wealth tax, how on earth would you administer this and calculate the values?

Once you have decided upon a method to value a pension, are you then taxing the gross or net amount? Is a £1m pension pot which you would have to pay tax on the income worth the same as £1m cash in the bank which you don't have to pay tax on to access?

Would you value the £500k home you bought 20 years ago for £100k in the same way as a buy to let property for the same figures? Is the BTL worth the same?  What about the CGT if you had to sell the BTL?

It would be a nightmare to administer, would create many inequalities and could doubtless be avoided by careful planning.  

It sounds very similar to the periodic and exist charges on relevant property trusts that were introduced, which the government have already said are far too complicated, and can  be avoided altogether with adequate planning anyway.







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