Tens of thousands of homeowners could be hit by new council tax bands as Rachel Reeves sets her sights on higher-value homes
The Mail on Sunday understands tens of thousands of homeowners could be affected by new council tax bands as Treasury officials consider targeting higher value homes.
Wealthy Londoners and those in the South East are expected to be priority targets as Chancellor Rachel Reeves tries to find £42bn to balance Labour’s books.
Property experts believe new council tax bands for higher-value properties, rather than a revaluation of all homes across the country, would appeal to the Treasury and raise tax revenues by raising more cash from wealthy homeowners.
This will allow Ms Reeves to ignore Housing Minister Steve Reed’s promise during this Parliament not to revalue homes for council tax gains.
And the new bands will provide a cash injection to local authorities, reducing the need for them to tap the Treasury for grants.
David Fell, principal analyst at estate agent Hamptons, said: ‘Adding a higher council tax band would probably be one of the fairer and least disruptive property tax reform ideas we have seen put forward so far.’
Band H, the highest level of council tax in England, applies to properties valued at £320,001 or more in 1991 when they were last revalued.
Mr Fell said: ‘[This band] It includes newly built, four-bedroom homes as well as 20,000 square meter mega mansions with multiple value.’
Wealthy Londoners and those in the South East are expected to be key targets as Chancellor Rachel Reeves tries to find £42bn to balance Labour’s books
A British property worth £424,000 in 1991 is estimated to be worth an average of £2.1 million today, according to figures from Nationwide. But in London, where house prices have exploded since then, the value of such a property would be close to £3 million by 2025.
Key targets of tax band reforms include the exclusive London boroughs of Kensington and Chelsea, where the average house currently sells for £1.8 million on Rightmove.
There is precedent for such a move; Wales added an additional council tax band in 2005 to cover properties valued at £424,000 or more in 2003.
The news follows comments from Ms Reeves last week that clamping down on those with ‘broad shoulders’ could be ‘part of the Budget story’.
And fears remain that any council tax rise would further put the brakes on the crumbling property market. Sales of properties worth more than £5 million in central London in September fell 40 per cent on last year.
A Treasury spokesman said: ‘The budget will strike the right balance between ensuring we have enough money to fund our public services and ensuring we can deliver growth that raises living standards.’
