Chancellor John Healey has ruled out expanding Labour’s proposed mansion tax to include homes valued at £1.5 million. This decision follows warnings that such a change would significantly impact middle-class homeowners, particularly in London.
The Treasury had been considering lowering the threshold of its council tax surcharge from £2 million to £1.5 million to generate additional revenue for cost of living support. However, reports in the Sunday Times and the Financial Times indicate that this measure has now been dismissed.
The existing mansion tax, announced by former chancellor Rachel Reeves last year, is set to come into force in 2028. It will apply to homes valued at £2 million or more, with an annual charge of £2,500 for properties between £2 million and £2.5 million, and £7,500 for those worth £5 million or more.
Expanding the tax to £1.5 million homes could have effectively doubled the number of London properties subject to the levy, potentially tripling the number of suburban London homes paying the tax, according to City AM analysis. Adam French, head of consumer finance at Moneyfacts, had previously stated that lowering the threshold would have a broader effect on the capital's homeowners than the 'mansion tax' label suggests.