South: Mansion tax is outdated and unnecessary, says new research from the Centre for Policy Studies

New research published today by the Centre for Policy Studies reveals that any case for a mansion tax is now redundant as recent tax reforms have significantly increased the tax burden on higher-value properties.

The Shrinking Case for a Mansion Tax, by Lucian Cook, director of research at Savills, shows that properties that would be targeted by a mansion tax have already been subjected to significant tax hikes since the policy was first mooted five years ago.

Recent stamp duty land tax reforms have increased the tax burden on 'mansions' by £1.1 billion – the top 1.6% of households now pay almost half of all SDLT.

The introduction of, and recently increased rate of, an annual tax on enveloped dwellings has added at least another £100 million a year to the tax paid by 'mansionsm', closing the loopholes which existed when the mansion tax was first proposed.

As an example, the tax paid on a house now being sold in SW London for £2.5 million has increased by 405% since 2009.

Cook commented: “The recent reforms of property taxation are raising as much from high-value properties as any mansion tax. If in addition to these reforms, a mansion tax were introduced after the next election, it would add a layer of complexity and unfairness into the tax system for residential property. On top of that, the economic impact of a mansion tax is impossible to quantify but would clearly be damaging, not least in seriously undermining the attraction of the UK (and London in particular) to overseas investors.”

Tim Knox, director of the Centre for Policy Studies, commented: “For economic recovery, the UK does not need new taxes targeted at the aspirational, the successful and sometimes the fortunate. Rather, it needs lower, simpler taxes which encourage innovation and productivity and which stimulate, not penalise, wealth creation.”