Fears have been raised that Rachel Reeves could mount a new push for a ‘mansion tax’ after the Tories vowed to abolish stamp duty.
Kemi Badenoch put property taxes firmly on the agenda with the bold pledge in her conference speech yesterday.
And the move has spurred new speculation that the Chancellor, who is urgently trying to address an estimated £30 billion deficit in the public finances for the Budget, will announce a major overhaul.
The IMF has urged an overhaul of property tax, and the Treasury has not denied reports that an annual charge based on value is being considered.
That would go some way to appease Labour MPs who have been baying for so-called ‘wealth taxes’ to fund more spending.
However, this could potentially lead to households paying thousands of pounds annually, depending on the specific proposals. Critics have cautioned that residents in high-cost areas like the South East and pensioners with fixed incomes might be significantly affected.
Last year the Tony Blair Institute proposed a levy worth 0.5 per cent of the value of each property, to replace council tax.
Fears have been raised that Rachel Reeves could mount a new push for a ‘mansion tax’ after the Tories vowed to abolish stamp duty
Kemi Badenoch put property taxes firmly on the agenda with the bold pledge in her conference speech yesterday
Last year, the Tony Blair Institute suggested a levy set at 0.5 percent of each property’s value to replace council tax. The think-tank proposed a minimum payment of £1,350 for homes worth less than £270,000 and a maximum of £6,250 for those over £1.25 million.
The TBI report estimated that 4.1million people in larger homes would end up paying more, although 12million would have lower bills
The think-tank suggested a minimum payment of £1,350 for properties worth less than £270,000, and a maximum of £6,250 over £1.25million.
The report estimated that 4.1million people in larger homes would end up paying significantly more, although 12million would have lower bills.
The change was praised as potentially boosting growth by giving an ‘incentive for older homeowners in high-value properties to downsize’.
A separate proposal from the Onward think-tank, which was reportedly gaining attention in the Treasury, would introduce proportional annual payments for properties valued up to £500,000.
The report estimated that would need to be 0.44 per cent to replace council tax revenues, with a minimum annual payment of £800.
There would be a 0.54 per cent annual charge on the portion of the property value between £500,000 and £1million, and 0.81 per cent above that.
Onward indicated that these thresholds would be financially neutral for the government, although exempting those who have already paid stamp duty could result in an initial deficit.
ITV’s Robert Peston noted that abolishing stamp duty is being considered in No. 11 as part of a broader reform of housing taxation, which includes introducing a new annual tax on more expensive properties. However, he expressed doubt about whether the plan would be prepared in time for the Budget on November 26.
The TBI report pointed out that revenues from council tax have been falling as a proportion of property values
Ms Reeves told the Treasury Committee after the Budget last year that officials had proposed replacing council tax with a ‘broad-based property tax’. But at the time it was ‘not something that we wanted to take forward’.
Another option often mooted to raise revenue is adding an extra council tax band for the most expensive properties, as has already happened in Labour-controlled Wales.
Tory MP Harriet Baldwin told the Daily Mail: ‘Rachel Reeves is clearly looking everywhere for new things and new ways to tax – your business, your farm, your pension, your home.
‘Nothing is safe from her desperate, growth-destroying Tax-zilla budgets.’
