The government is considering plans to lower the mansion tax threshold to properties valued over £1.5m. This potential change could affect nearly 300,000 homes, with Chancellor John Healey reportedly debating extending the levy.
The original mansion tax, announced in last year’s Autumn Budget by former chancellor Rachel Reeves, applies to properties worth more than £2m. Properties over this valuation are set to incur an annual charge of £2,500 from April 2028. Homes valued between £2.5m and £3.5m face a £3,500 fee, while those between £3.5m and £5m would pay £5,000, in addition to council tax.
Government sources have indicated that lowering the threshold is a "live discussion" within the Treasury. This comes as Chancellor Healey seeks to find £10bn to balance the books for the Autumn Budget in October, facing pressure to reduce his fiscal headroom.
Opponents of the mansion tax have warned that lowering the threshold could negatively impact the property market. Kirstie Allsopp, presenter of Location, Location, Location, stated that it could deter homeowners from adding value or performing basic maintenance on their properties, fearing their homes might cross the £1.5m threshold.