Plans are reportedly under consideration to significantly broaden the scope of the mansion tax, potentially before it even takes effect. Chancellor John Healey is said to be weighing up proposals to lower the tax threshold from £2m to £1.5m.
This 25 per cent reduction in the threshold could nearly double the number of London homes that would pay the tax, according to City AM analysis. The original measure, introduced by then-Chancellor Rachel Reeves, was intended to affect "less than the top one per cent" of British properties and raise over £400m, costing up to £7,500 for the highest-value homes.
Suburban areas of London are predicted to be most affected by the potential change. Boroughs such as Hackney and Wandsworth could see a near-tripling in the number of homeowners paying the tax. The widened scope would also mean smaller properties, including apartments and terraced houses, could be charged.
Adam French, head of consumer finance at Moneyfacts, noted that lowering the threshold could lead to a "wider effect on the capital's homeowners than the label of a 'mansion tax' suggests." He also warned that homeowners could have substantial wealth tied up in property without a high income to cover the annual charge.
A Treasury spokesperson stated that tax decisions are a matter for the Chancellor to announce at fiscal events, rather than commenting on speculation.