One of Britain’s leading tax experts has raised serious questions over Rachel Reeves' planned mansion tax on high-value homes expected in her make-or-break Budget. Dan Neidle, founder of Tax Policy Associates, questioned proposals to hit 100,000 of the most expensive properties with an average charge of £4,500, as they would be based on out-of-date valuations.
Ms Reeves is understood to be looking to revalue council tax bands F, G and H to raise more cash to fill a black hole in her spending plans of at least £20bn. This comes as her hopes for economic growth to fill the spending gap appear dashed, after reports that the Office for Budget Responsibility has downgraded its growth forecasts until 2029.
Mr Neidle said reports that the government could revalue council tax bands F, G and H “don't make sense to me,” noting that there has not been a revaluation since council tax was first introduced in 1991. He explained that to determine which band a home is in, one must play a “particularly boring game of 'let's pretend'” where the house and its surroundings flash back to 1991, producing “weird results.”
As an example, he noted that in Walthamstow, east London, there are just 70 properties in the top three council tax bands, while in Mid-Buckinghamshire there are 15,000, despite homes in the former now being worth much more. He said the problem is easy to solve—just revalue all bands—but it is politically tricky because half of households would pay less and half more.
Mr Neidle suggested the government might instead consider a real mansion tax of 1 per cent on properties already worth £2 million or more, which could raise £2bn. However, he cautioned that it could cause a block in the housing market if values dropped, and that “pretty ordinary people in £3m houses” might struggle to afford the tax, leading to a deferral system.
