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EnergyClegg in 'mansion tax' sale advice
Filed under: Tax
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John Stillwell/PA Wire
The man, whose name was given only as John, rang in to the Deputy Prime Minister's weekly radio phone-in on London's LBC 97.3 to complain he would be unable to afford to stay in the property if the tax was introduced.
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He explained that since he bought the home in the capital's fashionable St John's Wood area, the value of the property had "sky rocketed" to £5 million - leaving him facing the prospect of a massive tax bill under the Lib Dems' proposed annual levy on properties worth more than £2 million.
"I work hard, I earn a reasonable salary. I do not earn as much as Mr Clegg but I'm happy with what I earn, but no way could I afford to buy a house now for anything like £5 million," he said.
"Now, the mansion tax would mean I would have to pay an extra £30,000 a year tax, being 1% on the difference over £2 million. This would take my total tax rate to 78%. So my only option would be to sell the house that my family and I have lived in for 20 years and to withdraw my children from school."
Mr Clegg however strongly defended the plan, suggesting John would indeed be better off if he chose to sell up and move out.
"Because you paid very little for it - how can I put this? I'm obviously not urging you on selling your home but if you were, as your children get older and so on, to decide to sell your home, you would be millions of pounds better off because you've got a small mortgage from 20 years ago and that is in a sense, pure profit," he said.
"That's one thing which I don't know whether you're prepared to do anyway." The idea drew an unhappy response from John, who replied: "But it's my home and I have to move out of the area."
Mr Clegg also suggested that pensioners who were hit by the mansion tax could defer payment until after they died when it could be charged to their estate.
He said: "Of course you could make exceptions for those people who have lived in properties for a long period of time and have retired and obviously aren't in a position to pay that kind of levy every year. You could pay it as part of your estate, for instance."
Mr Clegg however strongly defended the plan, suggesting John would indeed be better off if he chose to sell up and move out.
"Because you paid very little for it - how can I put this? I'm obviously not urging you on selling your home but if you were, as your children get older and so on, to decide to sell your home, you would be millions of pounds better off because you've got a small mortgage from 20 years ago and that is in a sense, pure profit," he said.
"That's one thing which I don't know whether you're prepared to do anyway." The idea drew an unhappy response from John, who replied: "But it's my home and I have to move out of the area."
Mr Clegg also suggested that pensioners who were hit by the mansion tax could defer payment until after they died when it could be charged to their estate.
He said: "Of course you could make exceptions for those people who have lived in properties for a long period of time and have retired and obviously aren't in a position to pay that kind of levy every year. You could pay it as part of your estate, for instance."
© 2013 Press Association
Five biggest taxpayer stings
- 1. HMRC vs Vodafone<p> Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.</p>
- 2. HMRC vs Goldman Sachs<p> The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC <em>did</em> claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.</p>
- 3. Taxpayer vs Carlyle Group - QinetiQ<p> Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.</p>
- 4. Taxpayer vs NHS Management<p> The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.</p> <p> <br /> "BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.</p>
- 5. Taxpayer vs public sector productivity<p> Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.</p> <p> Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.</p>
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