George Osborne and David Cameron drop the proposed 'mansion tax', but maintain the rich will still pay higher taxes
A TAX on expensive properties will not be implemented, but the prime minister and chancellor warned the rich they will pay higher taxes before the next election.
The ‘mansion tax’ – originally proposed by Vince Cable (pictured) – would have seen a rate of 1% or 2% of the property’s value above a threshold of £1m to 2m, but both David Cameron and George Osborne ruled out its introduction.
In spite of that, Osborne – cited in the Telegraph – said he was “going to have to ask the rich to make another contribution”, but did not provide greater detail on what that would entail.
He added that he was concerned the policy “will be sold to you as a mansion tax” before the election, and then afterwards, “a lot of the people in Britain are going to wake up and find their more modest homes have suddenly been reclassified as a mansion”.
Critics of the mansion tax had expressed worries it may have caught people who are asset-rich and cash-poor.
MHA MacIntyre Hudson tax partner Katharine Arthur added that a similar measure was imminent.
She said: “From April 2013, we already have a mansion tax of sorts being introduced with an annual charge on non-residential properties, worth more than £2million, held by ‘non-natural persons’ including companies.
“We repeat our calls for an exemption for genuine property investment companies, where properties are held by companies for commercial reasons, not to avoid stamp duty land tax.”