Proposed Lowering of the Mansion-Tax Threshold and Its Regional Impact

The new Prime Minister is reportedly weighing a reduction of the high-value council tax surcharge—commonly called the “mansion tax”—from a £2 million property-value threshold to £1.5 million. The change is intended to raise additional revenue for the Treasury while broadening the levy beyond its current focus on London and the South East.

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Analysis from property consultancy Hamptons, shared with *The i Paper*, estimates that lowering the threshold would add 137,000 households to the charge. Nationally, the number of liable homes would rise by 102 percent. The increase is steeper in the Midlands and the North, where affected households could grow by 150-180 percent.

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• In the North West, households would climb from 3,249 to 7,639.

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• In the West Midlands, the figure would rise from 1,812 to 5,040.

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In London, the impact would shift toward “fairly modest family homes” such as three- and four-bedroom Victorian terraces. Michael Dent, founder of Property Tax Lab, notes that 35 percent of households in the Royal Borough of Kensington and Chelsea and 25 percent in Westminster would fall within the new levy.

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If properties valued between £1.5 million and £2 million were subject to the lowest surcharge level of £2,500 per year, the Treasury could collect an extra £343 million annually. Existing rates remain £2,500 for homes over £2 million and rise to £7,500 for those over £5 million.

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Former chancellor Rachel Reeves argued the tax is needed to address “wealth inequality.” Critics warn it could burden pensioners on modest incomes; a government consultation on a deferral mechanism aims to let cash-poor retirees postpone payment until a sale.

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The Fairer Share Campaign proposes a proportional property tax of 0.48 percent of property value, arguing that current council tax “deeply penalises” residents of poorer areas.

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“The bigger impact would be outside of London,” — North David Fell, lead analyst at Hamptons

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