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17

5

Properties valued £2m-£3m

Under the first mansion tax proposal outlined by the Liberal Democrats, the amount of the yearly tax

payment would be equal to 1% of the home value above the current threshold. Assuming a £2m

threshold in 2016, this would generated £217.5m in revenues from properties across England and Wales

valued between £2m to £3m.

However, the Labour Party’s newest version of the proposal aims to alleviate part of the mansion tax

burden on home owners at the lower end of the taxable range by charging them £3,000 annually. This

would reduce 2016 revenues from the £2m-£3m property bracket by 25% to £162.4m. The revenues

from London properties in this price bracket drop by 27% from £173.5m to £126.1m under the new

proposal.

Despite the overall decrease in the tax mansion amount collected from this property bracket, not all

homeowners with homes valued £2m-£3m are better off under the new proposal. For example, under

the initial proposal a homeowner with a house valued at £2.1m would have been subject to a £1,000

mansion tax payment in 2016. Under the most recent proposal, that homeowner would owe £3,000 in

2016 mansion tax payments.

Of the 54,147 UK homes valued between £2m and £3m in 2016, 44% are actually worse off, in terms of

being subject to a higher mansion tax payment, than they would have been under the initial proposal.

Table 8: Change to mansion tax payment, properties valued £2m-£3m

Revenue collected

Average payment

No. household with a

2016 payment <£3,000

1

st

mansion tax proposal

£217.5 m

£4,017

23,595

2

nd

mansion tax proposal

£162.4

£3,000

0

Source: Land Registry, Cebr analysis

© Centre for Economics and Business Research