More than 1.3 million middle-class families across England are bracing for significant council tax increases as Chancellor Rachel Reeves prepares to introduce what insiders are calling a 'mansion tax' in this month's Budget.
What the New Tax Means for Homeowners
The Treasury plans to revalue properties currently designated as Band F or higher for council tax, potentially affecting one in ten English homes. This move is expected to raise approximately £600 million for government coffers.
While Labour insiders claim the measure will only impact the wealthiest homeowners, analysis reveals that ordinary families, particularly those in London and the South East where property values have soared, will bear the brunt. Households in Band F properties could face annual surcharges of hundreds of pounds on top of their existing council tax bills, which already average £3,293.
Political Backlash and Economic Concerns
Shadow chancellor Sir Mel Stride has accused Labour of waging 'a class war against middle England', warning that the party is 'punishing aspiration and hitting hardworking people'.
Speaking to The Telegraph, Stride declared: 'Under Labour, nothing is safe – not your job, your home, your savings, or your pension.' He later told the Daily Mail that Britain is witnessing 'the most shambolic pre-Budget period in memory', with constant policy leaks creating economic uncertainty.
Former Conservative chancellor Sir Jeremy Hunt echoed these concerns on Times Radio, stating: 'The whole world is reading this information and they're looking at British economic decision-making. And it looks very chaotic.'
Regional Impact and Housing Market Fears
The geographical distribution of the tax burden is particularly striking. In some areas of London and the South East, over 15% of all homes will fall within the scope of the new levy. The system could see up to a quarter of homes revalued in certain regions.
Economic experts have warned that the uncertainty surrounding the new tax could prove damaging to the housing market, potentially affecting property values and market confidence.
The most severe impacts will be felt by the 150,000 homeowners living in the most valuable properties within Bands F, G and H, who face paying thousands of pounds more each year. Around 300,000 of the most expensive homes are likely to receive a council tax surcharge following revaluation.
This tax initiative represents one of several measures Chancellor Reeves is considering to raise an estimated £25 billion to strengthen the country's finances, following her decision to abandon plans to increase income tax.
The council tax system has attracted Labour's attention because economists frequently describe it as 'regressive'. The current system relies on property values from 1991, meaning residents of smaller homes often pay proportionally more tax than those in larger properties.
Other options under consideration include a full revaluation of all properties, following a review commissioned by Minouche Shafik, the Prime Minister's chief economic adviser.
