UK Chancellor Reports Plans Annual 1% Mansion Tax Homes Over £2M

Chancellor Rachel Reeves is reportedly considering introducing a mansion tax on properties valued over £2 million as part of the upcoming Budget, aiming to address a significant shortfall in public finances. The proposed tax would charge 1% annually on the value exceeding £2 million, with higher rates potentially applied to super-prime and second homes, generating an estimated £2 to £3 billion in revenue. Critics, including estate agents and former Bank of England governor Lord King, argue the tax is a blunt instrument that fails to capture net wealth accurately and could negatively impact the housing market, especially among those with mortgages. There is also concern that this tax could disproportionately affect the middle class and older homeowners, with warnings that it might drive away wealth generators and exacerbate market stagnation. Labour officials have expressed support for wealth taxes as a practical necessity to fund public investment, while opponents view the move as politically divisive and potentially damaging to aspirations. The government is also considering replacing council tax with a new property value-based levy, signaling broader reforms in property taxation.