No Wealth Tax please – we’re British
There has been a lot of noise in recent months about the possibility of a wealth tax in the UK. The wealth tax often conflated with the idea of a mansion tax has long been a feature of Napoleonic regimes but in the UK, where house prices are both high and volatile, there is not the necessary correlation between available income and value of real property held to make such a tax practical. There has also always been a resistance to dry taxes that is a charge unsupported by incoming funds income with which to pay it.
Over the weekend, a Mail on Sunday article reported that Chancellor George Osborne has confirmed this resistance and ruled out the imposition of wealth or mansion taxes. There is a hint that alternative measures might be considered and whether the political constraints will require some other form of high wealth taxation remains to be seen. There may be further clarity in the Chancellor’s speech to the Conservative party conference.
Even with this announcement we should not overlook that the stand alone charges for high value (£2m or more) properties owned by companies and some trusts put forward in the March budget look like they will go ahead. These charges include an annual charge on a sliding scale and to this extent represent a mansion tax. The stated aim of these charges is to prevent people holding property through a company rather than being a mansion tax per se, but there is enormous concern in the profession as to how these will be implemented in any workable way and strenuous representations are being made. Draft legislation is expected in December and we can expect further comment then.
For now if you have property held in any kind of vehicle other than direct personal ownership please ask us at Mercer & Hole about your options, so that if the legislation is introduced in April 2013 you have an opportunity to rearrange your affairs before then.
Date: 8th October, 2012
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