Q&A: Mansion tax
What is the ‘Mansion Tax’?
The ‘Mansion Tax’ refers to an annual tax on high value properties: houses worth more than £2 million. Vince Cable introduced the concept of a Mansion Tax back in 2009. Our Levy would only apply to the most expensive 0.5% of houses – just 70,000 properties. The threshold would rise in line with house prices, so a property worth £1.9 million now will not incur the Levy in the future if its value rises in line with the average.
Why is the Mansion Tax necessary?
In 2010, we were borrowing more than £150 billion a year – £1 for every £4 the Government spent. We’ve now halved the deficit we inherited from Labour, but we need to finish the job of eliminating it fairly, in full and on time.
Unlike the Conservatives who want to balance the books on the backs of the poorest, we will continue to tackle the deficit fairly by asking the wealthiest to pay their fair share. A Mansion Tax on the most expensive houses in the UK is a key part of how we will do this.
How much will the Mansion Tax cost?
We will set bands for properties worth over £2 million, with a fixed charge for properties in each band – just like the way Council Tax works. We will ensure that those in the lowest bands pay a much smaller charge then those in the top-value properties. We will set the bands and charges so that we raise £1 billion when the Levy is introduced in 2017/18. We will then raise these bands each year in line with house price inflation.
How much will the Mansion Tax raise?
The Mansion Tax will raise £1 billon a year. We will use this to help balance the books.