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Second homeowners could be hit by new 'mansion tax'

By Western Morning News  |  Posted: November 21, 2012

Housing
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Wealthy Westcountry second homeowners could be hit by a "mansion tax" that sees them paying more to the council for their expensive properties.

Liberal Democrat Business Secretary Vince Cable has hinted at the Government imposing a new council tax band on high-value properties, and Tory Chancellor George Osborne is believed to be sympathetic to the idea.

The move, which could feature in the Chancellor's autumn statement next month, would likely have a large impact in Devon and Cornwall where property prices have spiralled in the last decade, though London would be hit hardest.

Conservative ministers have resisted Lib Dem pressure for a 1% annual levy on homes worth more than £2 million, which would have hit around 2,300 properties in second-home hotspots and estates in the greater South West. Instead, other new wealth taxes for the best off are coming to justify another £10 billion of cuts in welfare that are necessary to keep deficit-reduction plans on track.

An increase in the rate of stamp duty on properties selling for seven figures and a rise in capital gains tax are also thought to be "on the table", according to sources. The highest rate of council tax is currently Band H, levied on properties worth £320,000 or more in 1991. But that means the super-rich in multi-million-pound mansions pay no more than many whose properties have simply grown in value to around £1 million now.

Mr Cable said: "There needs to be a sense of fairness, and these best-off people in society have got to contribute more. This is all under discussion."

Dan Rogerson, Lib Dem MP for North Cornwall, welcomed the proposal if it helped to reverse the soaring number of part-time residents in the region. Devon and Cornwall boast about 26,000 holiday homes and have among the highest levels of second home ownership, which critics blame for pushing up house prices beyond the reach of local people.

Mr Rogerson said: "There might be a case to split the top band. But we have to make sure it does not hit people living in modest properties who are affected just because of where they live."

George Eustice, Conservative MP for Camborne and Redruth, said: "It is important that everyone pays their share towards getting the country's finances back in order but we must be very careful to ensure we don't do anything that will undermine people's aspirations or hit those who have worked hard."

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  • Brizz_Tony  |  November 24 2012, 9:09PM

    There is no need to have a good accountant to save money in tax on a holiday let home. The rules are simple, and clearly explained in the HMRC self-assessment website. No-one likes paying tax, but if you are running a business, it's a fact of life. The scam was to have a second home, pretend to rent it out, and claim the mortgage interest back against tax. That is immoral, as well as illegal, and it takes a house out of the stock. Renting out a home provides somewhere for the tourists to stay whilst they spend piles of cash in the local area. If HMRC suspect you are pulling a fast one, they will call you in. They can go through your bank records without you knowing it. They can - and do - go back several years. They can give you a big fat bill and a few penalties. If you do the job properly, they will accept the money with thanks, and put it towards the next hospital.

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  • Charlespk  |  November 24 2012, 6:21PM

    The more you read in these pages, the more you realise why so many of the 'have-nots' haven't got, and probably never ever will have (except mobile phones of course). .They now always seem to expect someone else, or the state to give it to them.

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  • Big_Ger  |  November 23 2012, 8:11PM

    Thanks to Jungle Jim and Brizz Tony. Obviously my message was a very simplistic and short explanation of the rudiments for making best use of the taxation opportunities which second homes present. Any good accountant versed in holiday home law would be able to supply detailed and legal advice for minimising ones tax outgoings, in a comprehensible package for a reasonable fee.

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  • Jungle_Jim  |  November 23 2012, 7:04PM

    Brizz_Tony Correct on the rules, but not hard to circumvent - and with the reduced staffing and numbers involved, do you honestly believe HMRC are likely to catch anyone? i know people who have declared losses on holiday lets for years without question I'm sure there was a comment here from the serial arguer when I was reading on the bus...........good this park & ride.

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  • 2ladybugs  |  November 23 2012, 5:47PM

    To be more correct....homes left empty for two years will be charged 150% approx 3000 homes. Holiday/second homes will lose their 10% discount approx 14000 homes

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  • Truro_Kernow  |  November 23 2012, 5:30PM

    Tax evasion and avoidance is immoral. Many corporations, companies and the appaling MPs at Westminster are at it and now certain posters here are discussing it. That is utterly disgusting and downright deceiptful. You fall sick or need help and who is meant to pay for it? Second homeowners look likely now to pay 150% tax. Good. I trust that those of us who are campaigning for a tourist levy see success to. Public services need to be paid for. How to save money? Scrap nuclear weapons, end dubious foreign wars NOW and tell the Westminster Government clearly to keep their noses out of other peoples' business. That would save billions! Kernow bys vyken!

  • Brizz_Tony  |  November 23 2012, 4:52PM

    Big Ger said: "Here's a tip. Declare, and register your second home a "holiday property", register it as a business asset. Lend it to whomever you normally loan it to at present, for example, to friends and family, for a peppercorn rent. Not only can you avoid such taxes, you may even get tax back, and you can also claim repairs, decoration and depreciation of your asset as legitimate business expenses. You will also be able to claim tax back for legitimate expenses occurred when you drive down to visit and inspect the property." It wouldn't work. To qualify for tax relief, the home must be a true holiday let, and cannot be let at "mates rates", lest the taxman . It has to be let for at least 15 weeks,and available to rent for at least 30 weeks. No one rental period can exceed 31 days. You play the slippery eel with HMRC at your peril. You will get a penalty as well as a tax bill.

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  • H_Trevorrow  |  November 23 2012, 1:29PM

    The effect of mansion tax on second homes will be nothing so why does Rogerson bring second homes into every press statement he makes??? Obviously it is pure electioneering . Trying to deflect the blame his party are, quite rightly, taking on to johnny foriegner. Mathew Taylor, a politician from his own party, already analysed the effects of second homes and declared that they had nothing to do with housing affordability.

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  • 2ladybugs  |  November 23 2012, 1:04PM

    I do wonder at the wording of the first sentence in this report " Wealthy Westcountry second homeowners could be hit by a "mansion tax" that sees them paying more to the council for their expensive properties" In other words, the only people that it is likely to effect is, as it states, "the very wealthy who can afford expensive properties" The cheaper properties won't be affected therefore it is hardly likely to free up any affordable housing for first time buyers. I thought the "mansion tax" was only going to apply to houses over a certain value!!!??? In other words very few second homes are going to be affected.

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  • Jungle_Jim  |  November 23 2012, 12:30PM

    Big_Ger Your tax avoidance scheme is well known (and well used). The last government were changing the rules on holiday lets so you couldn't offset any 'losses' against other income thereby getting tax relief (at up to 50%). This was to bring the tax treatment of holiday lets (owned by UK residents) in the UK and the EU in line otherwise they would have to do the opposite and allow losses on holiday lets owned elsewhere in the EU to be set against other income. Of course Georgie Boy went for the second option as it's only their wealthy mates that have second homes they pretend to let out as opposed to those genuinely running holiday lets. Why is it that there is an opinion held by a number here that you are either a wealthy, hard-working 'captain of industry' or a drug addled waster that sponges of the state. Most people (almost certainly including themselves) fall into the general category of your average hard working person.

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