Burnham plots homes tax raid on middle class: Plan to lower mansion levy limit will hit more than 150,000 families with four-figure hikes
Andy Burnham is preparing to launch a financial raid on scores of middle-class homeowners by dragging them into a punitive ‘mansion tax’ regime, The Mail on Sunday has revealed.
Reducing the extra tax threshold to cover homes worth £1.5 million means more than 150,000 families face four-figure tax increases, particularly in southern England.
This could be a double whammy for homeowners in the area, as Mr Burnham is also considering replacing council tax with a system based on land values that would make people living in the South pay three times more than those in the North, where property is generally cheaper.
Sources have told this newspaper that Mr Burnham is considering reducing Chancellor Rachel Reeves’ mansion tax threshold, which will hit in April 2028, from £2 million to £1.5 million.
In some parts of London the relatively modest four-bedroom terraced house exceeds this threshold.
Conservative Party leader Kemi Badenoch attacked the plans as another example of Labour’s ‘politics of jealousy’.
It comes as the future prime minister faces growing pressure from backbenchers and unions to impose a ‘wealth tax’ on the middle classes to cover the spiraling costs of welfare and public services.
Experts predict that forcing families to pay estate tax would only raise a modest £250 million a year; But this could cause extra hardship for families struggling in the cost-of-living crisis, damage a fragile property market and pave the way for bigger tax raids in the future.
Prime Minister candidate Andy Burnham. Sources have told this newspaper that Mr Burnham is considering reducing Chancellor Rachel Reeves’ mansion tax threshold, which will hit in April 2028, from £2 million to £1.5 million.
Picture: A £1.6 million house in south-west London. Burnham is set to launch a financial crackdown on middle-class homeowners by dragging them into a punitive ‘mansion tax’ regime
Under Ms Reeves’ current plans, homeowners worth more than £2 million would be hit with a levy of at least £2,500 a year, officially called the ‘high value council tax surcharge’; It will rise in bands to £7,500 for properties valued over £5 million.
Around 180,000 properties will be affected by these plans, but Michael Bruce, chief executive of estate agent Purplebricks, said: ‘An estimated 150,000 additional households could be affected by these plans if the threshold falls to £1.5 million. If the Government wants growth, this is the wrong place to start.
‘Housing is one of Britain’s biggest economic drivers, but the market is already fragile. Policies that discourage people from moving don’t just affect homeowners; It also affects buyers, sellers, tradesmen, retailers and the wider economy.’
The biggest pressure for new taxes on homes predominantly in the South is coming from Labor MPs in the Midlands and the North, the party’s old heartland.
Union Unite, historically Labour’s biggest financial backer, has also called for Mr Burnham to introduce a wealth tax when he replaces Sir Keir Starmer in No10 on July 20, as is widely expected.
Chief Secretary Sharon Graham said: ‘We must take a crack at the wealth tax to ensure our public services are protected… The choice should not be between defending our nation or paying for schools, hospitals or roads.
‘We must put workers and communities first.’
Last week Mr Burnham strongly hinted that he planned to raise taxes, saying he would ‘stick to his manifesto promises’ not to increase income tax, VAT and national insurance but said there was ‘room for maneuver on tax’.
Image: A £1.85 million house in south-west London that could raise taxes under Burnham
Conservative leader Kemi Badenoch attacked the plans as another example of Labour’s ‘politics of jealousy’
He has promised to cut business rates for pubs, music venues and independent high street shops, which are financed by high taxes from warehouse operators such as Amazon and vacant high street property owners.
Ms Badenoch said: ‘Andy Burnham is making the same mistakes Keir Starmer made; He imposes taxes and hits working families, but we should have cut spending. Labor may change its leader, but the problem will always be Labor and its politics of jealousy.’
The specter of a mansion tax has already hit the property market, reducing the number of homes for sale to over £2 million, adding to pressure for a lower threshold.
Original plans for the mansion tax are said to have set the threshold at £1.5 million, but this has been increased out of fears that Labor voters and public sector workers would be hit.
Meanwhile, Labour’s Red Wall Group of more than 40 MPs has called for council tax and stamp duty to be replaced by a flat annual tax of 0.48 per cent of property value; A plan that Mr. Burnham had previously approved. This means a property valued at £500,000 would be taxed at £2,400 per year
Such a system would mean Southerners would pay an average of £1,650 a year, while Northerners would pay just £600 a year in bills, according to analysis by the Daily Telegraph newspaper.
Polling by Lord Ashcroft on page 10 of today’s MoS reveals that voters see Mr Burnham as more Left-wing than Sir Keir by almost two to one.
