Chancellor Rachel Reeves is preparing to target middle-class families with a new property levy in the upcoming Budget, a move expected to raise £600 million for the Treasury. The controversial plan involves revaluing hundreds of thousands of homes across England.
The New 'Mansion Tax' Explained
This new charge, dubbed a 'mansion tax' by Labour insiders, will focus on properties currently in council tax Band F or above. This represents approximately one in ten homes in England, or around 2.4 million properties. A council tax surcharge is then likely to be applied to the most valuable 300,000 of these homes.
While marketed as targeting the wealthiest, the policy is set to impact a significant number of 1.3 million middle-class families living in Band F properties. Families in London and the South East, where house values are highest, are expected to be disproportionately affected.
Financial Impact on Homeowners
Affected households could face annual surcharges of hundreds of pounds on top of existing council tax bills, which already average £3,293 for these bands. The situation is more severe for the majority of the 150,000 homeowners in the most valuable Bands F, G, and H properties, who face paying thousands of pounds more each year.
This tax is one of a raft of measures Chancellor Reeves is considering to raise an estimated £25 billion to shore up the country's finances. It comes after she abandoned a planned 2p income tax rise, which the Office for Budget Responsibility concluded would not generate as much money as expected.
Political Fallout and Market Concerns
The announcement has triggered significant political backlash. Shadow Chancellor Sir Mel Stride accused Labour of waging "a class war against middle England", warning that the party is "punishing aspiration and hitting hardworking people."
Experts have also raised alarms, suggesting the uncertainty this new tax creates for millions of homeowners could be catastrophic for the property market. In some areas, particularly London and the South East, over 15% of all homes could fall within the scope of the new levy, with up to a quarter of homes being revalued in certain regions.
The proposed system is seen as a response to England's "regressive" council tax structure, which is still based on property values from 1991. A full revaluation of properties was also considered, but a separate surcharge is currently viewed as the most efficient way to collect extra funds.
If the plan proceeds following a Valuation Office Agency reassessment, the new tax is unlikely to be introduced until 2028 and could potentially be deferred until homeowners move or pass away.
