Planned mansion tax could force thousands of asset-rich, cash-poor pensioners to sell up, it has been warned, ahead of the Autumn Budget.
State pensioners could be forced to ‘sell homes’ over new HMRC letters demanding £10,000
A new tax could force thousands of pensioners to sell up. The Labour Party’s planned mansion tax could force thousands of asset-rich, cash-poor pensioners to sell up, it has been warned, ahead of the Autumn Budget.
Labour Party Chancellor Rachel Reeves is considering hitting homeowners in properties worth more than £2m with a one per cent annual levy in the Budget, which she will deliver on NOvember 26.
Property experts warned that retirees could be forced to downsize to avoid the extra tax – which would be as much as £10,000 a year for those in £3m properties.
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Tom Bill, at estate agency Knight Frank, warned “cash poor” pensioners were particularly at risk of getting caught up in 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.
“If a mansion tax were introduced, you would see some older homeowners forced to downsize, whether they were ready or willing to move out of their neighbourhood or not.”
Sarah Coles, of wealth manager Hargreaves Lansdown, said in a warning ahead of the address from Ms Reeves that discussions about a mansion tax could be “distressing” for retired homeowners.
She said: “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.”
Mervyn King, the former Bank of England governor, criticised the policy on Monday, saying that “adding another wealth tax” risked exacerbating Britain’s excessively complex tax system.
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”.