Andy Burnham is reportedly considering lowering the threshold for a "mansion tax" to include homes valued at £1.5 million, a move that could impact more than 150,000 families with significant tax increases. This proposal, which would drag more middle-class homeowners into the levy, is part of discussions around potential tax reforms.
The current plan, attributed to Chancellor Rachel Reeves, targets homes valued above £2 million with an additional council tax surcharge. If Burnham's suggested threshold of £1.5 million were adopted, it would significantly expand the number of properties subject to this extra charge, potentially leading to four-figure tax hikes for affected households, particularly in southern England.
This potential change comes amid pressure from some within the Labour party and affiliated unions to implement wealth taxes to fund public services. Experts suggest the revenue generated from lowering the threshold might be relatively modest, estimated at around £250 million annually. However, concerns have been raised about the impact on households already facing a cost-of-living crisis, the fragility of the property market, and the precedent it could set for future tax policies.
"An estimated 150,000 additional households could be caught if the threshold falls to £1.5 million," stated Michael Bruce, CEO of estate agent Purplebricks. "If the Government wants growth, this is the wrong place to start. Housing is one of the UK's biggest economic drivers, yet the market is already fragile. Policies that discourage people from moving don't just affect homeowners – they hit buyers, sellers, tradespeople, retailers and the wider economy."
Critics, such as Conservative leader Kemi Badenoch, have labeled the proposals as indicative of Labour's "politics of envy." She argued that such measures involve raising taxes and burdening working families, contrasting it with a need for spending cuts. "Labour can change their leader but the problem will always be the Labour Party and its politics of envy," Badenoch said.
Burnham is also reportedly considering replacing council tax with a land value-based system, which analysis suggests could disproportionately increase bills in the South of England compared to the North.
This is not the first time a mansion tax has been proposed. Initial plans reportedly set the threshold at £1.5 million but were later raised, partly due to concerns about affecting middle-income earners and public sector professionals. The "high value council tax surcharge" is officially set to take effect in April 2028, with rates ranging from at least £2,500 per year for properties over £2 million up to £7,500 for those exceeding £5 million.