Labour’s mansion tax will cost about £250 a month for someone in a home worth between £2 million and £3 million, shadow chancellor Ed Balls revealed today.
And anyone on an income below £42,000 would be allowed to defer payment of the new tax until they sell their home or die, he announced.
Writing exclusively in today’s Evening Standard, Mr Balls responded directly to jitters among Labour’s potential candidates for Mayor of London, several of whom have publicly voiced fears that “cash poor, asset rich” households would be stung for many thousands of pounds.
“Ordinary Londoners should be protected and wealthy foreign investors must finally make a proper tax contribution in this country,” he said. The tax would be “fair, sensible and proportionate”, he claimed, adding: “We will ensure those owning properties worth £2-£3 million will only pay an extra £250 a month through this new tax — the same as the average top band of council tax.
“Owners and investors in properties worth tens of millions of pounds should make a much bigger contribution.”
He said that overseas owners with second homes in the UK could be forced to pay “a larger contribution” than people living in their only home.
Responding to the charge that poorer pensioners in expensive properties would be hit, he vowed that “long-standing residents” on less than the higher rate of income tax — that is, less than £42,000 a year — would have a right to defer the charge “until the property changes hands”.
Mr Balls also addressed concerns that rapidly rising property prices in the capital would see ever-more London households sucked into the tax.
His answer was to raise the threshold in line with the average prices of “mansions” costing £2 million and more, rather than in line with average house prices.
“We will guarantee that more modest properties are not brought into the scope of the tax,” said Mr Balls.
He attacked Conservative claims that he would hit properties worth far less than £2 million at today’s prices as a “desperate smear”.
With today’s policy changes, he argued, the starting threshold would probably be higher than £2 million rather than lower.
Labour leader Ed Miliband earmarked £1.2 billion of revenue from the Mansion Tax for extra NHS staff.
