UK households are bracing for a so-called 'death tax' as the Labour Party government prepares a £7,500 HMRC raid on properties. The Labour government is under fire over its proposed 'mansion tax'.
Details of the Proposed Tax
HMRC bills surpassing £115,000 could be sent out to households under the plan from Chancellor Rachel Reeves. Under the crackdown, homes valued above £2 million are set to be targeted, according to recently published Treasury consultation documents.
Homeowners earning below £35,000 annually will have the option to postpone paying the 'high value council tax surcharge' until their death or the sale of their property.
Interest and Financial Impact
However, the interest charge would accumulate on deferred amounts if it is potentially set at HMRC's current late payment rate of 7.75 per cent. Analysis shows postponing the maximum yearly charge of £7,500 over a decade could result in a combined liability exceeding £115,000, which would then fall upon inheriting relatives alongside any existing inheritance tax obligations.
Political Reactions
The Conservative Party have condemned the deferral mechanism as forcing pensioners into what they describe as 'a cruel pay as you die policy.'
Sir James Cleverly, the Shadow Housing Secretary, said: 'Many pensioners will be pressured into deferring the new surcharge, and then passing the bill on to their children. When combined with inheritance tax, this is a cruel double death tax.'
He added: 'Labour are punishing aspiration and success, and none of the money will go to local communities.'
Elliot Keck, a Conservative councillor for Westminster's Hyde Park ward, where over 60 per cent of properties exceed the £2 million threshold, told The Telegraph that the policy is 'driven by little more than spite and envy.'
Government Response
A Treasury spokesman said: 'We want to provide options to people in more difficult circumstances, for example those who may struggle to pay or who meet certain disability criteria – that is what our consultation set out. We are addressing a longstanding unfairness in our country, where a Band D home in Darlington or Blackpool pays nearly £300 more in council tax than a £10 million mansion in Mayfair.'
