Labour plans for ‘mansion tax’ under fire report Harris & Co accountants Northampton #accountantsnorthampton
Labour’s plans for a new ‘mansion tax’ to fund improvements to the NHS, announced at the party’s annual conference yesterday, have been widely criticised by accountants as unworkable and unfair to individuals on low incomes but who are asset rich
Labour leader Ed Miliband said his party plan will plough an additional £2.5bn into the NHS by 2020, which he expects to raise via a mansion tax on properties valued at over £2m, a new levy on tobacco firms and a crackdown on tax avoidance by tackling loopholes used by hedge funds and large firms that move profits out of the UK
Speaking in Manchester, Miliband said Labour would ‘save and transform’ healthcare services in a 65-minute speech, in which he forgot to tackle the deficit and immigration.
Miliband said estimates suggested the plans would bring in around £1.3bn, to be used to provide 20,000 more nurses, 8,000 more GPs, 5,000 more careworkers and 3,000 more midwives, but without extra borrowing or ‘asking working people to pay extra tax.’
However George Bull, Baker Tilly’s senior tax partner, said analysis suggested the mansion tax as outlined would not necessarily be able to plug the gap in NHS funding.
‘It won’t have a great impact on the NHS, but it will have a dramatic impact on those who have to pay it. The Department of Health had a budget of around £110bn in 2013-14, with most of this being spent on the NHS. So the reality is that if Miliband were to introduce a “mansion tax”, then this wouldn’t even keep pace with inflation increases in the NHS budget.
The Labour party has not yet published details of how the mansion tax would be calculated or administered.
Early estimates indicate that up to 90% of the potential mansion tax payers would be based in London, where property prices have soared in the last 20 years.
James Hender, head of the private wealth group at Saffery Champness, said estate agency figures said there are approximately 97,000 properties worth more than £2m in the UK, suggesting that each home owner will be paying more than £17,000 in tax on average according to the Labour party’s projected level of NHS funding.
‘Miliband has not talked about what protection will be in place for individuals who are asset-rich yet cash poor, nor for those who might own a £2m property but have a large mortgage,’ Hender said.
‘But a wealth tax that targets only one very specific type of wealth makes no sense - especially when the wealth targeted is illiquid and produces no income. There"s no reason to suppose that someone living in a £2m house can lay hands on the £20,000 a year that even a 1% tax would demand"