Labour’s controversial ‘mansion tax’ plan will force thousands to downsize and drive many more into a bureaucratic nightmare of legal appeals, an official study shows.
The punitive tax is likely to affect around 165,000 properties when it is introduced in 2028.
Owners of properties worth more than £2million will pay an annual charge of up to £7,500, depending on the value of their home. They will pay this extra fee on top of their standard council tax bill.
But up to 50,000 households could struggle to pay the charge from their annual income, the Office for Budget Responsibility forecasts. It estimates that about 5,300 families could be forced to sell up and move somewhere cheaper.
Tens of thousands of homeowners are also likely to be caught up in a bureaucratic appeals system, it estimates.
Under the plans set out by Rachel Reeves at the Budget, people in homes worth more than £2million will pay an extra £2,500 a year.
Those in homes valued at more than £2.5million will pay £3,500. Those worth more than £3.5million will pay £5,000 and properties valued at over £5million will be pay an extra £7,500. The OBR said the ‘narrow’ bands would distort the property market and result in property prices ‘bunching’ below them.
Labour’s controversial ‘mansion tax’ plan will force thousands to downsize and drive many more into a bureaucratic nightmare of legal appeals, an official study shows (Keir Starmer and Chancellor Rachel Reeves are pictured)
It suggested that 20 per cent of owners could appeal against their valuation, with 40 per cent likely to be successful –equal to more than 13,000.
The Chancellor said it will deal with ‘wealth inequality in our country’ and will apply to 1 per cent of homes.
Shadow Chancellor Sir Mel Stride said: ‘What the analysis shows is that Labour’s new tax on homes will distort the housing market. Fewer houses built, homes selling for less to avoid huge tax bills, and more bureaucracy and uncertainty for home owners.’
