Withers Comments on Labour's 10p Tax Rate and Mansion Tax Plan
The Labour party has announced that it would seek to reintroduce the 10p rate of income tax, funding this through a tax on properties over £2 million — a so-called 'mansion tax'.
Chris Groves, a wealth planning partner at Withers, has an interesting take on the news.
‘The debate misses a fundamental point,’ he says, ‘which is that a mansion tax for some properties worth more than £2 million is already due to be introduced on 6 April, in the form of the Annual Residential Property Tax.
‘The ARPT will apply to residential properties worth more than £2m owned by offshore companies. While the ARPT has been presented as a targeted anti-avoidance measure to encourage the direct ownership of property, it clearly sets out how many of the practical objections to a mansion tax can be overcome.
‘For property owners currently faced with a decision as to whether to restructure ownership of UK residential property to avoid liability to the ARPT, the possibility of a general mansion tax being introduced after 2015 can only encourage the retention of existing corporate structures and defeat the original intention of the ARPT legislation.’
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