A newly released map has identified the areas that would be most adversely affected if Andy Burnham implements a major tax change on homes. Burnham, the Labour MP for Makerfield and frontrunner to replace Sir Keir Starmer as Prime Minister, is reportedly considering lowering the Mansion Tax threshold from £2 million to £1.5 million. According to analysis by Tax Policy Associates, this change would disproportionately impact homeowners in London and the South East of England.
London to Bear the Brunt of Lowered Threshold
London is expected to face the largest proportion of price hikes under the proposed adjustment. Areas such as Battersea, Kensington, Bayswater, Hammersmith and Fulham are most likely to be affected. Additionally, Camden, Barnet, and Ealing are also tipped for major changes. The South East of England is the second most affected region, with Surrey and Hampshire set to be the hardest hit, followed by Windsor and Newbury.
Other Affected Regions
Outside London and the South East, Hertfordshire and Trafford are also listed as areas where the Mansion Tax change could significantly impact homeowners. The Mansion Tax was originally introduced last year as part of Chancellor Rachel Reeves' budget, applying extra charges to homes worth £2 million or more.
Revenue and Stability Concerns
Tax Policy Associates estimated that a £1.5 million threshold would tax around 150,000 additional homes, almost doubling the number of properties in scope. However, simply adding a lower band would not raise a great deal of extra money. To get close to doubling the yield, the tax would have to become more aggressive, with £1.5 million homes paying the current lowest charge of £2,500 and charges for existing £2 million-plus bands being pushed upwards. On that basis, net revenue could rise to about £800 million a year. The report noted: "Mr Burnham may regard this option as tempting. There is, however, a serious downside: tax systems need stability. Expanding a tax before it’s even been introduced is, in our view, the opposite of stability."
