New ‘mansion tax’ proposed for luxury homes in London

Westminster Council has announced plans for a ‘mansion tax’ on properties worth over £10million. The funds generated could be used to freeze council tax for other residents in the area.

However, the tax would be completely voluntary, meaning the wealthy would be able to choose to support the less well-off residents of their local council area. As a council area, Westminster is home to both of the nation’s wealthiest and poorest households.

Council tax is a local taxation system used in the UK, in which each property is assigned to a ‘band’ (A-H) depending on the value of the property. The higher the value of the property, the higher the council tax band.

Who would the mansion tax affect?

In Westminster, there are approximately 2,000 owners of properties in the £10million+ bracket. Under the proposed scheme, these ‘H band’ homeowners would be asked to contribute an additional £1,377 per year, double their current contribution. As a comparison, those living in ‘A band’ properties pay £445.

Nicki Aiken, the leader of Westminster council, has titled the payment a ‘Westminster community contribution’ as opposed to a mansion tax, no doubt wary of an association with the compulsory mansion tax proposed by the Liberal Democratic and Labour parties several years ago. Despite a sceptical response from some, Aiken said she had spoken to wealthy homeowners in the area, many of whom were keen to contribute more to their local council and support others in the area.

With the potential to generated up to £2.75million, the funds raised could be used for projects such as youth clubs and other council services. However, it remains to be seen what the uptake on such a scheme would be; the scheme will be in force from April of next year.