As much as £50,000 could be knocked off the value of properties in the UK following Rachel Reeves' latest move, experts have warned. Properties in England over the value of £2 million will face a surcharge of at least £2,500 from 2028 in what has been coined the new 'mansion tax'. The treasury has admitted that affected properties could see 2.5% knocked off their value, leading to losses of around £50,000 on a £2 million home and £125,000 on a £5 million home.
Experts have warned that this new surcharge could backfire on the Government with losses in stamp duty revenue. In fact, estate agency Savilles said the Government could lose £75 million in income from stamp duty, The Telegraph reports. The warning comes after a parliamentary question from James Cleverly, the shadow housing minister.
Cleverly has previously criticised the new tax introduced by Rachel Reeves. He said: "Labour’s new family homes tax is an attack on aspiration.
"It punishes people who have worked hard, saved hard and invested well to fund a welfare splurge for people who don’t work at all. We have forced Labour to admit this tax will also hit property prices, leaving homeowners tens of thousands of pounds down in lost equity, compounding the tax surcharge."
The latest Government figures reveal that tax receipts rose by 23% this year to £18.2 billion. Meanwhile, stamp duty paid on homes rose by over £2 million, totalling £2.2 billion in 2024-25.
In response to Cleverly's question, Treasury minister Dan Tomlinson said: "The policy costing for the surcharge assumes an average price impact on affected properties of 2.5pc with greater effects around the band thresholds."
Meanwhile, a Treasury spokesman said: "We are reforming property taxes so a £10 million Westminster mansion doesn’t pay less than a typical family home in England. Fewer than 1% of properties are affected – this targets only the very highest-value homes, not ordinary families."
Dan Neidle, lawyer and founder of Tax Policy Associates, told The Telegraph: "It’s fair to say this surcharge was introduced for political reasons. It doesn’t raise very much, it takes two years to come in, and they have to build the infrastructure to do it; 100,000 properties don’t value themselves. The ratio of cost versus revenue collected is very high."
