Labour considers lowering mansion-tax threshold to £1.5m, potentially more than doubling homes affected

The Treasury is considering lowering the threshold for England’s planned high-value property surcharge from £2 million to £1.5 million, potentially bringing around 271,000 homes within the tax.

The proposal remains under discussion and has not been confirmed as government policy.

The Times reported, citing two government sources, that reducing the threshold remains a “live discussion” inside the Treasury. Reuters reported that the change would more than double the number of properties subject to the levy based on current valuations.

A Treasury spokesperson declined to comment on the proposal, saying tax decisions are for the Chancellor to announce at fiscal events.

Threshold could more than double tax base

The existing policy, announced last year, would introduce an annual surcharge from 2028 on homes valued above £2 million.

Properties above that threshold would initially face an annual charge of £2,500, rising to £7,500 for properties worth more than £5 million.

Reducing the starting threshold to £1.5 million would substantially broaden the number of households affected.

Around 271,000 properties would fall within the levy based on current valuations, according to the figures reported by The Times and Reuters.

The potential change comes ahead of Chancellor John Healey’s first Budget on October 28, as the government faces pressure from borrowing costs and demands for additional revenue.

No decision has yet been announced.

But lowering the threshold would materially change the reach of a tax originally presented as a surcharge on particularly high-value homes.

At £1.5 million, more than twice as many properties could fall within its scope than under the existing £2 million proposal.

Sources

• Reuters – Labour government considers lowering mansion-tax threshold to £1.5 million