Taxation has been one of the main factors influencing the £2m residential market in the recent past. In March 2012, stamp duty was increased from 5% to 7% or 15% for those held by “non-natural persons”. This has resulted in sales over £2 million accounting for 0.3% of all transactions but generating over 22% of all residential SDLT receipts.

In addition, the introduction of annual charges on dwellings held by “non-natural persons” has generated receipts of £100 million in 2013-14, much greater than expected by the Treasury. This has encouraged the Government to propose an extension of the charge in the Spring 2014 Budget to all property worth in excess of £500,000 owned in this way. We believe such targeted legislation has substantially weakened the arguments for 
a more widespread mansion tax.

Instead, the Liberal Democrats have suggested they are looking at changes to council tax charges for the most valuable property as an alternative, and we believe Labour may follow suit. Accordingly, all eyes will be on the extent of the proposed council tax increases for the most expensive properties as the parties formulate their policy in this area.

Taken from
Residential Property Focus Q2 2014