Considering the complexity, extent, and level of uncertainty surrounding the mansion tax proposal a
number of additional considerations arise. Some of the most crucial ones are outlined below.
Based on the Labour Party’s remarks, the proposed mansion tax would raise £1.2bn in 2016.
Homeowners whose properties are valued £2m-£3m would be subject to a £3,000 yearly payment. The
number of homes that fall into that category across England and Whales is 54,147- which makes the
revenues from that property bracket approximately £162m. If the remaining £1.04bn is to be collected
from homeowners whose properties are valued above £3m, the average mansion tax payment for those
homeowners in 2016 would be £24,052.
Such a substantial leap in mansion tax payment amount will create a cluster of properties valued at just
below the £3m threshold as buyers look to fall into the lower payment category. This clustering will
further affect prices at the top of the market.
One of the first steps in the implementation of the proposed mansion tax would likely prove most
controversial and perhaps rather costly. The Labour Party’s proposal suggests that property values will
be self-reported. While the bracket structure eliminates the need to estimate the exact property value,
the series of property revaluations would likely still be subject to dispute; especially for properties valued
near the threshold values. The difficulty in assessing property values is evidenced by the range of current
estimates regarding the number of affected properties. This report puts the number of properties
affected in 2016 at 96,592. Other recently released estimates regarding the number of affected homes
vary greatly and are displayed in Table 17 below.
Table 17: Number of homes subject to the 2016 mansion tax estimates
Source of estimate
Number of UK homes affected by 2016 mansion
Knight Frank (estate agent)
Savills (estate agent)
The Labour Party
Hometrack (residential property advisory)
Cost of implementation
When projecting revenues from the proposed mansion tax, it is also important to consider the costs
associated with property valuations and how much this would cut into the revenue. If self-valuation is
utilised this will somewhat limit the valuation costs, but other expenses, including handling potential
appeals regarding bracket placements, remain. Other expenses include gathering data on low income
home owners exempt from mansion tax and calculating back payments owed by those homeowners
upon sale of the property.
© Centre for Economics and Business Research