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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