We are back in the Great British Bake Off season (hurrah!) and as tension mounts in the tented kitchens in rural Berkshire, I know it’s time to distract my tastebuds with thoughts of other half-baked ideas.
The first of these was the collective sigh of relief which must have been audible over the whizzing of mixers from the programme’s producers – the Great English, Welsh and Northern Irish Bake Off doesn’t have quite the same ring – but that’s old news.
Other idle ponderings led me to wonder where the tents might be located in the future if the Labour party’s proposed mansion tax is introduced. I venture to speculate that Welford Park might come within the new charge. Will the tents become a permanent fixture and let out for other programme makers with the hope of generating additional income to pay the tax?
Controversy surrounds the whole idea – some suggest that it is simply a tax on London and the South and others see it as an additional inheritance tax on those who are bricks-and-mortar-rich but cash-poor. The mooted idea is that those who find themselves in this position can defer payment of the tax until the earlier of death or sale, but doesn’t this defeat the object of raising funds now to inject into the NHS?
It also fails to take into account any existing borrowing on the property – so a tax on the value maybe entirely disproportionate if the owner is mortgaged up to the hilt to pay the tax itself.
Inheritance tax seems to be an active debate on the political agenda with the Conservative party’s announcement regarding pensions – the proposal is that the chancellor will abolish the 55 per cent tax that currently applies to untouched ‘defined contribution’ pension pots left by those aged 75 or over, and to pensions from which money has already been withdrawn.
The result is that those who inherit what is left, will now only pay the marginal income tax rate, or no tax at all if the deceased was under 75 and the pension is left untouched.
The missing point, from a political perspective, is that only a proportionately small minority of the population will be adversely affected, and those with properties worth over £2 million (whether that reflects the equity or not) will probably garner little sympathy from the general public.
Any form of wealth tax, which this undoubtedly is, is always an emotive issue. No party will gain the electoral support it needs by overtly protecting the perceived ‘haves’ from funding vital health services, for example, for the ‘have nots’ or the ‘have not so muches’.
Perhaps those with properties worth just under the £2 million threshold will think twice about installing that brand new kitchen in which to practise their freshly-inspired patisserie skills, to avoid pushing its value over the proposed limit.
Or if the half-baked idea was left to prove for a while longer with some form of public consultation to achieve greater ‘fairness’ (which, when it suits them, is HMRC’s refrain) by introducing, for example, different entry thresholds based on geography and location, it might get more appetising.
Sophie Mazzier is counsel at boutique private wealth law firm Maurice Turnor Gardner LLP