Andy Burnham to tax 300,000 properties as Labour accused of ‘damaging the worth’

The government is considering plans to lower the mansion tax threshold to properties worth over £1.5m, a move that could hit nearly 300,000 homes across the UK

The government is weighing up plans to slash the mansion tax threshold to properties worth over £1.5m, a move that would impact nearly 300,000 homes. Labour initially unveiled the tax on properties valued at more than £2m in last year’s Autumn Budget by former chancellor Rachel Reeves.

Properties above this valuation are due to pay a £2,500 annual charge from April 2028, while those worth £2.5m to £3.5m face a £3,500 fee. This climbs to £5,000 for homes valued between £3.5m and £5m, with the charge imposed on top of council tax.

Chancellor John Healey is now mulling over expanding the levy, meaning the number of homes ensnared in the mansion tax net would reach 271,000 based on current valuations, as reported by City AM.

Government sources told The Times that reducing the threshold was a “live discussion” in the Treasury, as Healey scrambles to find £10bn to balance the books for the Autumn Budget in October. Healey is confronting mounting pressure to slash his fiscal headroom after the war in Iran sent the cost of government borrowing soaring.

The chancellor is targeting a reduction in his headroom from £23bn to £5bn, prompting economists to believe tax hikes are unavoidable, particularly those which target wealth.

But the government is not planning to forge ahead with plans to reform stamp duty and council tax, despite both being backed by prime minister Andy Burnham before he entered Downing Street.

Affecting the market Critics of the mansion tax have cautioned that lowering the threshold could harm the property market, as individuals might intentionally undervalue their homes to avoid the charge.

Kirstie Allsopp, host of the telly property programme Location, Location, Location, told Times Radio: “It’s going to stop people adding value. It’s going to stop people doing basic maintenance, because everyone is going to be terrified of sending their property, which is worth £1.3 or £1.4m, over the £1.5m threshold.

“And anyone whose property is just over the threshold, they’re actively going to be damaging the value. People are going to stop looking after their homes for fear of the day when the person comes around and says, your home is worth more than £1.5m.”