Labour MP calls £1.5m mansion tax threshold report a damaging leak

The Times reported this week that Labour is considering lowering the threshold for its mansion tax from £2 million to £1.5 million. The proposal was discussed by a studio panel, which examined what the change would mean and whether the leak was politically motivated.

Under the last Budget, the then Chancellor Rachel Reeves introduced a council tax surcharge for properties worth more than £2 million. It runs on a sliding scale, adding £2,500 a year to council tax bills at the lower end and up to £7,000 a year for the most expensive homes. The Times reported that Treasury officials are looking at lowering the starting point to £1.5 million, which would bring more properties into scope.

Rachel Blake, the Labour MP for a central London constituency, said she believed the report was a leak and warned that leaks can be damaging to individual behaviour and market behaviour. Asked whether she was speaking for herself or reflecting an official Labour position, she did not confirm the policy. She said she would be concerned about reducing the threshold, arguing it could have unintended consequences. She drew a distinction between £30 million or £40 million properties that may sit empty and two or three-bedroom family homes whose values have changed since council tax was last valued.

Other panellists took different views. A Liberal Democrat said the party had long backed a mansion tax but that the reality of house prices and different constituencies makes it difficult for parties to touch. They argued the wider property market needed bold reform, especially for younger people struggling to get on the housing ladder. A Conservative panellist said the leak was terrible but claimed it was purposeful and aimed at the Holborn and St Pancras by-election. They said a £1.5 million threshold would not work and would hit families in the north who need larger homes.

The panel also considered whether the surcharge could encourage downsizing and free up the property market. Viewer comments sent in reflected the split. One said asset rich but cash poor families would be severely affected and that the measure was a tax on the South East. Another said anyone who can afford a £2 million property can afford more tax and could downsize or take a lodger. At the end of the discussion, the Chancellor, referred to in the segment as John Healey, was urged to focus on investment for economic growth ahead of the Budget. The transcript ended before that point was fully developed.