Mansion tax 'could affect over 100,000'
More than 100,000 homeowners could be affected by Labour's pledge to introduce a mansion tax if they win the 2015 general election.Speaking at the party's conference in Manchester, shadow chancellor Ed Balls said he would introduce the levy on homes worth more than £2 million to free up funding for the NHS.According to the Financial Times, the tax would need to raise an average of £11,000 per home to hit the party’s target of £1.2 billion a year.London would be hit particularly hard by the levy, as property website Zoopla reveals it is home to 88 per cent of the relevant properties. This has provoked criticism from the capital's mayor, Boris Johnson, who described it as a "tax on London".However, Labour has insisted protections would be put in place for people, such as pensioners, who live in valuable properties but do not have a high income. For example, owners might be able to defer the levy until the sale of the property or their death.The mansion tax proposed by Labour is progressive in character, featuring several bands, with the tax rate rising along with the value of the home. Mr Balls said the reforms would be implemented in a "fair, sensible and proportionate way".Recent years have seen an increase in property taxes, with stamp duty rising from four per cent to five per cent on £1 million-plus homes and the coalition introducing a seven per cent threshold on £2 million-plus homes.An 'Annual Tax on Enveloped Dwellings' has also been brought in for properties bought through corporate structures, raising £198 million between September 2013 and May this year.According to experts quoted by the Financial Times, the policy could lead to price falls at the top end of the market.Lucian Cook, director of research at Savills, said the impact on prices could not be forecast, describing it as a "nightmare model".
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