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![\"Luxurious](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/11\/Mansion.jpg\")
\t\tPrime London Houses in desirable London neighbourhood\t<\/p>\n
A mansion tax in next week\u2019s Budget could stifle property markets and disproportionately harm homeowners in London, Manchester and Edinburgh, tax experts have warned.\u00a0<\/p>\n
Rachel Reeves is reportedly planning a mansion tax raid on high-value properties, as she takes a \u201csmorgasbord\u201d approach to the Budget after last week\u2019s dramatic income tax U-turn<\/a>.<\/p>\n The Chancellor has told<\/a> Labour MPs to champion the coming mansion tax as a measure hitting wealthier people the hardest, and sparing working people.<\/p>\n While Reeves could pull various levers to produce a tax on mansions, City AM reported<\/a> last week that she is favouring a council tax surcharge on expensive homes.<\/p>\n Houses over a certain value, such as \u00a31.5m, would face an additional 1 per cent tax on the value above that level, meaning a home worth \u00a32m would have to pay an extra \u00a35,000 a year on top of its existing council tax.<\/p>\n The tax risks stagnating the property market because it will take money out of the pockets of the only people who can afford to buy high-value properties, experts claim, which could lead to slowing sales of up-market homes.<\/p>\n Chris Ball, CEO of Hoxton Wealth<\/a>, said: \u201cIt\u2019s going to lead to a stagnant property market again. Cities like London, Manchester and Edinburgh could be hit particularly hard.\u201d<\/p>\n Sean Dury, a senior tax partner at audit advisory firm Blick Rothenberg, told City AM that a mansion tax would hit London properties where the value has increased since the 1991 council tax assessments due to the \u201cfailure\u201d of housing strategy rather than the quality of the houses.<\/p>\n The Government should consider reliefs on the mansion tax for London properties to mitigate this, he said.<\/p>\n Dury said: \u201cProperty Taxes have always been emotive, especially in London, so necessary policy changes should not be just headline grabbing but well thought through to avoid unintended consequences.\u201d<\/p>\n Sean Bannister, tax advisor at Edwin Coe, said the Government should pair council tax reform with changes to stamp duty and a lower charge on residential property transactions.<\/p>\n Bannister said: \u201cThe regime as it stands is stifling movement across the market and is stopping people achieving their ambitions and desires, part of which may be owning a home, but also can be as broad as changing local area for new job or business opportunities, growing ones family and even downsizing to free money to gift to the next generation.\u201d<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tIf Reeves can\u2019t cut tax, she could at least make it more competitive<\/a><\/p>\n The Government\u2019s attempts to focus the Budget\u2019s tax rises on those with the \u201cbroadest shoulders\u201d could have unintended consequences, Bannister said.<\/p>\n He added: \u201cHow broad is becoming a real question now, and the Chancellor needs to have pause about what feels like an increasingly personal attack on a mobile demographic.\u201d<\/p>\n City AM has revealed<\/a> the UK is in the grips of a \u201cbrain drain\u201d which is three times larger than previously thought.<\/p>\n London\u2019s super-rich are already ditching London mansions for flats and considering leaving the country altogether, a leading developer has warned<\/a>.<\/p>\n Though Reeves is said to be favouring a council tax surcharge, other possible forms of a mansion tax include introducing a new higher band or doubling the rate of tax charged on properties in the two highest current bands, G and H.<\/p>\n The Chancellor could also use capital gains tax<\/a> to target high-value properties, by ending the exemption on primary residences for properties valued above a certain figure, which could be set at \u00a31.5m.<\/p>\n Experts have warned that targeting the top bands of council tax could produce a \u201cgranny tax\u201d which disproportionately affects elderly Brits.<\/p>\n