Homeowners could be hit with a “double whammy” under the Labour Party government’s planned mansion tax.
UK households with foreign homes face mansion tax ‘double whammy’
Foreign homeowners will face a double tax hit after Labour’s “mansion tax” comes into force, it has been warned. Overseas homeowners could be hit with a “double whammy” under the Labour Party government’s planned mansion tax.
Some are facing two separate charges on the same property, it has emerged. The Treasury has confirmed that overseas owners who hold UK homes through companies will have to pay both the existing Annual Tax on Enveloped Dwellings and the new high-value council tax surcharge when it is introduced in 2028.
Labour Party Exchequer Secretary Dan Tomlinson said: “If a residential property currently attracts the ATED and is above the threshold for the high-value council tax surcharge, it will pay both.”
READ MORE Major European airline cancels 160 flights – but passengers will be ‘rebooked’
More than 5,000 homes worth more than £500,000 already pay an annual levy – the Annual Tax on Enveloped Dwellings (ATED). Homeowners will pay up to a maximum £303,450 for properties worth £20m-plus.
Ministers confirmed this week that homes above the “mansion tax” threshold that already pay the ATED will pay both levies.
The ATED was initially levied on homes worth more than £2m, before the threshold was dropped to £1m in 2015 and £500,000 in 2016.
It applies to residential properties owned by companies, although exemptions are available for landlords.
Nimesh Shah, of accountancy firm Blick Rothenberg, said: “When [the Government] introduced the high-value council tax surcharge, no one thought about ATED.
“We’ve created another layer of complexity and taxes, which has created more friction in the property market.”
Paul Holmes MP, shadow minister for Housing, Communities and Local Government, said: “It’s right that overseas buyers pay their fair share, but the Treasury’s own admission exposes a muddled approach at the heart of the Government’s housing policy.”
165,000 homeowners are expected to pay the levy when it is introduced in 2028, according to the Office for Budget Responsibility.