Revealed: How the mansion tax could cost taxpayers £175m

 
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More than 120,000 households could face a bill of up to £4,800 each to have their property revalued thanks to Ed Miliband's mansion tax.

The total cost to homeowners of revaluing their properties would come to around £110m, according to upmarket estate agent Savills. But it's not only owners of high-end property who are in line for extra costs if Labour win the keys to Downing Street.

In a note compiled by Savills for The Telegraph, it suggested the taxpayer could also be hit for a bill of £175m as HMRC will be forced to pay for the cost of homeowners disputing the valuation of their property. HMRC would also be covering the cost of the both the valuation itself, as well as the valuation dispute procedure.

A number of property owners would seek to challenge the valuation of their property to ensure they are not subject to the tax, similar to legal disputes which arise over both inheritance tax and capital gains tax, it added.

Ed Miliband has pledged that if Labour win the General Election there will be a tax on properties valued at £2m and over. The levy on homes worth between £2m-£3m will be £3,000. But properties north of £3m could face a significantly higher tax bill. Labour claim the tax could raise more than £1bn, which would be used to fund the NHS.

The levy on each property will be £3,000. Savills warned the hike in stamp duty for higher value home purchases that resulted from abolishing the cliff edge in stamp duty and making the system more progressive in Autumn Statement, combined with" pre-election uncertainty" has already resulted in a 4.7 per cent drop in the value of £2m property in London in the six months to the end of March.

Lucian Cook, director of residential research at Savills, said:

The valuation requirements and associated potential for dispute mean that a mansion tax would be particularly costly and complicated to administer, reducing its efficiency a revenue raiser for the Treasury.

The potential costs borne by the tax payer will be a further concern to long term owners who are often asset rich but cash poor and for whom the tax itself is a significant concern.

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