Labour’s plans for a mansion tax on properties worth £2m or more could have a “detrimental” impact on charity fundraising, a legacy giving expert has warned.
Rob Cope, the director of Remember A Charity, a consortium of more than 140 charities that promotes legacy giving, said the biggest impact for charities would be if people chose to defer the annual tax on their high-value properties and it became a raised inheritance tax.
He said high-profile wealthy donors were already voicing concerns that the tax would cause them to reduce or reconsider the amount they will leave to charity if it goes ahead.
Lord Winston, a Labour peer, geneticist and TV presenter, told The Times that the tax would have “a serious knock-on effect” for charities, and those that rely on legacies were particularly at risk.
He was speaking after Ed Balls, the shadow chancellor, said those unable to pay the tax during their lifetime would pay it when their home was sold or through their estate.
The idea of a ‘mansion tax’ emerged at this year’s party conferences. Ed Miliband, the Labour leader, has said that owners of properties worth more than £2m would face an annual charge. Miliband said that £1.3bn raised by the mansion tax would be used to help fund the NHS.
The vast majority of those affected, said to be between 80 and 95 per cent, live in London and the South East.
Cope said: “If the annual tax become a raised inheritance tax it will undoubtedly have a detrimental impact on charities and the number of people leaving charitable gifts in their wills.
“It will only affect a small percentage of the population, but we are looking at some wealthy individuals who would potentially make a considerable contribution to legacy income.”
He said taxes were not the biggest driver or motivation for people leaving gifts in wills, but they were a contributing factor.
Legacy income has been growing over the last 15 to 20 years, he said, and people are beginning to talk about legacies in a way they have not done previously. “We need to continue that momentum,” he added.
Lord Wilson told The Times: “One very big consequence of this kind of announcement is that it makes it extremely difficult for people like myself to raise charitable donations for important causes.
“Because [those liable] can’t calculate what will happen to their estate, they will start refusing one of the most important areas of giving, which is legacy gifts. I think that will have an effect on charities like Cancer Research UK, which relies to a huge extent on legacy gifts. There are a large number of charities that should be very worried about this announcement.”
