The government’s mansion tax is set to cost The Treasury an estimated £400 million before money can start being collected, according to a report.
A freedom of information (FoI) request made by The Times reveals the Treasury expects to lose £215 million in stamp duty by the time the tax is introduced, and a further £65 million in inheritance tax by 2030/31.
The cost of identifying and valuing homes liable is estimated to cost the government a further £120 million.
Treasury officials responding to the FOI request referred to “behavioural effects” in the three year run up to the introduction of the mansion tax, which it estimates will cause stamp duty and inheritance tax receipts to slump by £230 million.
These “behaviours” include values of homes nearing the thresholds being expected to significantly drop. For example, the Treasury expects 90 fewer sales of homes costing more than £2 million each year on average, over the next three years.
Under the government’s mansion tax plans, from April 2028 homeowners will pay an annual surcharge on top of their council tax bill if their property is valued at £2 million or above.
The charges include four bands, with £2,500 a year payable for homes under £2.5 million; £3,500 for a £2.5 million to £3.5 million home; a charge of £5,000 for £3.5 million and £5 million homes; and £7,500 for homes above £5 million.
The FOI reveals the Treasury estimates the tax will generate a net £930 million by 2031.
