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First, they targeted second homes, and now they’re moving on to grand mansions.
It’s pretty evident where things are headed. It’s only a matter of time before regular homeowners feel the impact as well.
We all know about our deep fixation on property prices, and honestly, the statistics are mind-blowing. For instance, the total housing stock value in the UK recently topped £9 trillion for the very first time, according to estate agents like Savills.
In fact, there’s about three times as much money tied up in real estate compared to all types of pension funds, including the much-coveted defined benefit schemes.
Before Rachel Reeves’ bombshell budget announcement, the tax rates were already hitting record highs since World War II. Yet, the Chancellor found a way to squeeze more from both businesses and households through a wave of tax increases affecting nearly every financial aspect.
As the government is rapidly running out of fruitful revenue sources, homes are likely to become their last big target for ‘taxation.’ I mean, can anyone actually believe there’s a chance we’ll see a significant economic turnaround soon?
It’s been clear for ages that young professionals, if they want homes, are often left hanging unless their rich parents help with deposits.
This has understandably ignited a real sense of frustration among this demographic, as they feel that an implicit social contract has been upended.
Given all this, property seems set to become the latest financial lifeline for politicians—it’s seen as a quick win ideologically and can offer a treasure trove of new taxation opportunities.
Let’s be honest, Michael Gove didn’t help things. The ex-Tory minister instated new powers allowing local councils to double tax for second homes in England starting this April.
As expected, scores of financially challenged local councils eyed this briefly, resulting in areas, particularly those famous for tourism like Milton Keynes and Hull, now penalizing owners of secondary properties.
While it’s true many of these homeowners could probably stomach the extra costs, it’s pretty misleading to label this just as council tax. Honestly, it has little coherence with covering local government expenses; many owners of such homes seldom even use local public services.
The same pattern emerged with Reeves’ newly introduced high-value surcharge, warmly cheered by Labour backbenchers eager to boast about wealth taxes among their circles.
It’s clear we might all face Reeves’ ‘mansion tax’ sooner than expected.
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Yet again, this union has little to do with council budgets. Sure, they will collect the taxes for efficiency, but rest assured this money will flow right to central government, and let’s face it, it won’t even help with local bin collections or libraries.
Once the tax is in effect, despite the government claiming the £2 million threshold will adjust with inflation, it’s likely they’ll resist that adjustment, gradually pulling more properties into this ‘mansion tax’ net.
The model set by Labour can be seen when observing income tax or stamp duty, designed originally for high-value homes but gradually extending to many major transactions.
Real estate evaluations can be a complicated mess and prone to disputes, so brace yourself for enduring conflicts that could actually see the Treasury losing out financially from this approach. But that will hardly deter them.
In a nation where higher earners are on the brink of revolt, the only asset that simply cannot escape taxation remains housing.
