Reeves faces last-minute Labour revolt on ‘mansion tax’: Haggling over Budget raid ‘live’ as MPs panic over backlash from ‘aspirational’ voters

Rachel Reeves faces a last-minute rebellion against ‘mansion tax’ plans as MPs panic over backlash from ‘eager’ voters.

The Chancellor effectively confirmed at a reception this week that a policy targeting high-value homes will be announced in the Budget.

However, the form of the proposals is unclear; There are claims that last-minute negotiations are ongoing with Labor supporters.

London MPs are adamant that the annual percentage tax should only apply to properties worth more than £2 million.

This will affect fewer than 150,000 homes; The £1.5 million threshold could affect 275,000 homes.

A Labor MP told the Financial Times: ‘There have been a lot of discussions going on about this and we have been told that the tax will not come into play on homes costing £1.5 million.

‘It will be higher than this.’

Another asked: ‘Do they really want to lose every seat in London?’

Imposing a percentage tax on homes above a certain price would require new valuations, which is seen as a major obstacle.

Meanwhile, government sources have played down fears that residents in the South East could face council tax increases of more than 10 per cent.

There is speculation that Ms Reeves will announce the repeal of rules that force local authorities to hold referendums before imposing large increases.

However, government sources insisted there would be no change to the current 4.99 per cent rule in the near future.

A new ‘fairer’ funding deal is being announced today, with huge sums expected to be transferred from London and the South East to ‘deprived’ areas of the Midlands and the North.

Ministers are understood to be considering relaxing the council tax cap for a ‘very small number’ of central London authorities, such as Westminster, which have the lowest council tax levels in the country.

Government sources have suggested that such councils benefit from large revenue streams, but stressed that no final decision has been taken yet and there are no announcements planned.

A group of councils are warning they face insolvency due to spending pressures in areas such as social care and SEND provision.

Earlier this year the Government gave six local authorities in England permission to increase council tax by up to 10 per cent.

Ms Reeves is preparing for a brutal new round of tax rises as she seeks to plug a hole in the public finances estimated to be worth up to £40bn.

After making a messy U-turn on plans to raise income tax last week, he is believed to be looking at a ‘Smorgasbord’ of smaller increases.

The other ‘mansion tax’ option thought to be on the table involves doubling the highest rates of council tax.

This will affect more than a million families. This would mean an eye-popping increase from £3,800 to £7,600 per year for households in group G in England, and from £4,560 to £9,120 per year for those in group H.

Other possibilities previously suggested included the addition of extra council tax bands.

Any such measures would negatively impact London and the South East, where property prices are higher.

Critics warned it would lead to a crisis for retirees on fixed incomes and families straining to buy their dream homes.