The much-leaked plans by Labour to impose a ‘mansion tax’ will greatly disadvantage some and irritate others.

It will raise, at best, a paltry £2 billion which is 0.2% of the nation’s tax revenue and 6.6% of the ‘budget deficit hole’ the Chancellor needs to fill, but in emotional terms, such a tax would be a great deal more than this as an irritation factor.

It most definitely pays homage to the ‘class war warriors’ that appears to in the ascendancy within Labour.

Mansion taxes are a punitive, pernicious levy that has long been cherished by the left-wing but it will cause mayhem and huge disruption to the housing sector which, after all, makes up 5% of the GDP of the UK and is a significant driver of consumer spending.

Mansion taxes are a punitive, pernicious levy that has long been cherished by the left-wing but it will cause mayhem.”

If a mansion tax were accompanied by the abandoning of Stamp Duty this would trigger an avalanche of sales after the Autumn budget which will be a bonanza for homeowners, until they realise that the ongoing mansion tax liability will hit them in their pockets, as it is a post-tax cost.

How it might work

For instance, a 1% levy of the total value would represent probably 1.8% (if you are a higher taxpayer), so on a £2 million property the pre-tax cost of a 1% mansion tax, in cash terms, will be £36,000.

If the tax is ‘slab sided’ and starts at, say, £2 million of value, the owner of a home at £2.1million will be paying a tax of £38,000 a year; however, an owner of a property of £1.999million will pay nothing.  Good luck with the conflict arising from this disparity.

Currently, the UK has the highest property taxes in the world, when you include, Stamp Duty, Council Tax and CGT on second homes. The trick is, don’t make it worse.

The UK has lost about 16,500 millionaires as a result of the daft non-dom tax change.”

The UK has lost about 16,500 millionaires as a result of the daft non-dom tax changes and if there is anyone left, mansion tax will galvanise their hurried exit. The cost to the UK economy will be incalculable.

A mansion tax could freeze the uber residential market and this ‘constipation’ will percolate down to the other price ranges and before you look around, you will have gridlock.

London was always seen as a safe home for global capital, and it is now becoming toxic to the wealth creators who are fleeing to kinder fiscal climes such as Dubai, Switzerland, Monaco, Italy, and Portugal.

And another worrying sign is that the Treasury has recruited Torsten Bell to help prepare the Budget this autumn.

If you remember, he was responsible for the last attempt to turn a mansion tax in policy while working on Ed Miliband’s foolhardy attempt to win the May 2015 Election and not doubt contributed to David Cameron’s victory.

Council tax

Instead (and not as well as), Council Tax bands should be extended, and I predict that this will be understood and accepted by the payees, if the levels are sensible.

Agents don’t need more restraints on the market – I am aware that estate agents are laying off people in significant numbers, partly because of the National Insurance impositions of the last Budget, so maybe a message needs to be passed to ‘Rachel from Accounts’ that ‘punishing the worker and rewarding the shirker’ is an unmeritorious pursuit and not one appreciated by the electorate.

You would think that the lessons learned from the drubbing that Labour received recently during the Caerphilly By-Election (which hitherto was a 100-year-old stronghold for them), would be sufficient to get the Prime Minister to ‘wake up and smell the coffee’.

Trevor Abrahmsohn is MD of Glentree Estates