Pensioners could be among the hardest hit by plans reportedly being considered by Chancellor Rachel Reeves to introduce a one per cent annual charge on homes worth more than £2million.
The proposed levy could see owners of £3million properties facing yearly bills of up to £10,000.
Experts warn that many older homeowners, particularly those who are “asset rich but cash poor”, may struggle to afford the charge.
Some long-term residents who bought their homes decades ago and have since seen property values soar could even be forced to sell if they cannot meet the extra costs.
Tom Bill, at estate agency Knight Frank, warned that “cash poor” pensioners were particularly vulnerable to Labour’s wealth raid.
He said: “It doesn’t follow that if you happen to live in a large house, you have the cash to pay this levy – older people may have been in the house for decades and it has appreciated.”
The impact would be felt mainly in London and the South East, where 82 per cent of homes sold for more than £2million are located, according to research from Savills.
Lucian Cook, Savills’ director of residential research, said many of the homeowners affected would be older people who have lived in their properties for decades and are not prepared for new yearly tax bills running into thousands of pounds.
The impact would be felt mainly in London and the South East, where 82 per cent of homes sold for more than £2million are located
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Around 140,000 properties across the UK are currently valued at more than £2 million, according to Savills. Of these, nearly a quarter were sold after being owned for over 20 years.
Government data shows that almost one in five homeowners with property wealth above £500,000 are aged 65 or over.
Sarah Coles, from wealth manager Hargreaves Lansdown, said talk of a mansion tax could cause real worry for older people, describing it as “distressing” for many retired homeowners.
Experts warn that many older homeowners, particularly those who are “asset rich but cash poor”, may struggle to afford the charge
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GETTY“People’s homes are the place they’re safe. It can be incredibly emotionally difficult for people in their 70s and 80s to say ‘you need to move house’. Even talking about it is really distressing,” she said.
The Chancellor faces pressure to address a fiscal shortfall of up to £50billion, with the property levy forming part of potential asset taxation measures.
The proposal echoes previous attempts, initially suggested by Vince Cable in 2009 and later embraced by Ed Miliband’s Labour leadership.
Former Bank of England governor Mervyn King criticised the concept on Monday
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GETTYFormer Bank of England governor Mervyn King criticised the concept on Monday, arguing that introducing additional wealth taxation would worsen Britain’s already overly complicated tax framework.
Property market activity has already slowed, with estate agents reporting sellers reducing prices to complete transactions before the Budget on November, whilst agreed buyers withdraw from purchases.
A Treasury spokesman said: “The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy.”
