Lib Dems push £1m property tax

Monday, 21 September 2009 10:47

The Liberal Democrats today unveiled plans fro a new UK property tax on homes worth over £1 million.

Under the scheme, homeowners would face an annual charge of 0.5 per cent on the amount over £1 million a property is worth.

The owner of a property valued at £1.25 million would pay 0.5 per cent each year on £250,000 - or £1,250.

The Lib Dems claim this would earn £1 billion and pay for tax cuts for low paid earners.

Lib Dem Treasury spokesman Vince Cable will say today: "Liberal Democrat's starting point is to aim for fairer not higher taxes. I would do this by lifting tax thresholds, providing an incentive to work and to save.

"It is wrong that people earning little more than the minimum wage should be dragged into the tax net. Lifting the threshold to £10,000 would mean that four million low paid workers and pensioners would no longer have to pay any income tax.

"As chancellor my priority would be to cut income tax for those on low and middle incomes."

Richard Hair, past president of the National Association of Estate Agents and owner of Essex-based Hair & Son, explained to live in a £1 million property in his area, the owner would have to be very well off.

"A £1 million property is not going to be a terraced house in an area that has seen house prices go up. They are at the top end of the market with around half an acre of land and only available to the very wealthy," he said.

Mr Hair added the cost of owning a property worth over £1 million has remained "relatively small" compared to costs in other countries over recent years.

"It is a soft target and would not put people off buying a £1 million property," he concluded.

Chris Doyle, the chairman of the Royal Institution of Chartered Surveyors (Rics) taxation panel, highlighted a number of practical problems" in the tax and potential consequences.

"These include the need to ensure that valuations are fair and accurate, given that the last valuations were done 18 years ago; the cost of administration given the likely number of appeals; the ability to pay, since the proposed tax is based on the value of the property and not the owners income; and the potential market distortion such a tax would create," he said.

"A lack of information also means it is not straightforward to even estimate the potential revenues from, and benefits of, the scheme."

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