Rachel Reeves is set to hit thousands of Britain’s most expensive properties with a new levy as she prepares to lay out her highly anticipated Budget this week.
The chancellor is said to be targeting the wealthy with new taxes as she hopes to balance the books with a series of measures to be announced on Wednesday.
A new levy could be applied to some of the most valuable homes, known as a “mansion tax”. The move would reportedly revalue some of the most valuable properties across council tax bands F, G and H and hit 100,000 of them with a new surcharge.
The mansion tax was being suggested as a 1 per cent levy on properties worth £2m or more, but there is an expectation that it may be set much lower at a maximum of £5,000 because of concerns about the London housing market.
It is one of a series of wealth taxes Reeves is set to unveil to fill the spending black hole in her budget with other measures expected to include a profits tax on gambling companies demanded by former PM Gordon Brown, and a levy on bank profits.
What are salary sacrifice schemes?
A tax raid on salary sacrifice schemes could be announced in Wednesday’s Budget, reports suggest, raising fears that some people’s retirements could be put at risk.
Salary sacrifice schemes allow people to “give up” a chunk of their salary for a different benefit from their employer.
Employers may offer salary sacrifice as part of their pension scheme as a tax efficient way to help workers boost their pots.
When someone pays into a pension using salary sacrifice, the employer will pay the whole amount into the employee’s pension, including the employer’s contribution.
Sean O’Grady: Reeves’ Robin Hood budget may shore up party support, but not voters’
Labour’s new budget is set to lift the two-child benefit cap – a popular move in Parliament, says Sean O’Grady, but one that may unsettle voters already squeezed by the cost-of-living crisis:
Government dismisses criticism of workers’ rights bill
Downing Street dismissed suggestions that the Government had got its workers’ rights package wrong after Peter Kyle hinted at potential changes to the measures.
Asked whether the Government thought it had got it wrong, the Prime Minister’s official spokesman said: “No, the Government is inviting consultation because we’re committed to getting the detail right… that’s why we’re asking businesses and workers to share their views.”
Estate agents warn mansion tax could ‘create more uncertainty’
Estate agents have warned the speculated mansion tax could “create more uncertainty” in parts of the property market.
The mooted move will create more uncertainty at the highest end of the property market, due to its predicted escalatory nature, at a time when the market is already under pressure as a result of Budget speculation since the summer,” Dominic Agace, chief executive of estate agents Winkworth said.
“Guidance will need to be provided swiftly on the highest potential tax charge, so everyone can adjust accordingly.
“With non dom tax changes, VAT on school fees and mortgage rate increases, this will just add to more pressure on those living in these homes worth £2m upwards, particularly in London where owners may have leveraged up to buy them.”
Watch: Labour minister apologises for speculation around budget
Cabinet minister admits he does not know his council tax band
The Independent’s Whitehall editor Kate Devlin reports:
Business secretary Peter Kyle has said he does not know his council tax band, despite reports his government is planning to hike the levy for those in higher brackets.
He told journalists at the CBI conference in London: “I live in a small one bedroom flat in in Hove, I can’t even tell you what band I’m in”.
Rachel Reeves could hit more than 100,000 high-value properties with a mansion tax in her Budget on Wednesday as she seeks to raise money to fill a black hole in the nation’s finances.
The chancellor has reportedly scaled back plans for a property tax but is now expected to apply a tax to homes worth more than £2 million, in a move which could raise between £400m and £450m for the Treasury.
Some 2.4 million properties in the top three council tax bands – F, G and H – will be revalued to determine which will be subject to the surcharge, which will be worth an average of £4,500, according to The Times.
No 10 insist growth still ‘number one priority’
Growth remains the Government’s “number one priority”, a spokesman said amid reports that the Office for Budget Responsibility has downgraded its forecasts.
Asked about the prospect of downgraded forecasts, the Prime Minister’s official spokesman said: “I’m not going to get ahead of Wednesday. There’s only a couple of days to wait for that.
“This is a Budget that will build a fairer, more prosperous Britain with an economy that works for everyone… growth remains our number one priority.”
Downing Street said the welfare system “isn’t fair or sustainable” but declined to be drawn on whether the benefits Bill would be reduced at the Budget.
Asked whether cuts would be made, the spokesman said: “We will stick to our tough spending plans, clamp down on Government waste, and on welfare specifically we’ve been clear that the current welfare system isn’t fair or sustainable and we’re delivering reforms to change that.”
Pictured: Starmer visits school with education secretary
What is a ‘mansion tax’ and how would it work?
It was reported that the chancellor has scaled back on plans to introduce a levy to owners of the UK’s 300,000 homes worth £1.5 million and over, instead planning to apply a tax to homes worth over £2 million – of which there are currently 150,000. The move could raise between £400 and £450 million for the Treasury.
Around 2.4 million properties in the top three council tax bands (F, G and H) will be revalued to determine which will be subject to the surcharge, The Times reports.
Homeowners will reportedly be able to defer the cost until they die or move house to avoid forcing them to sell up.
My colleague Albert Toth has the full story:
Badenoch challenged over her performance as Tory leader at CBI conference
The Independent’s Whitehall editor Kate Devlin reports:
Even during a difficult week for Labour, with a make-or-break Budget on Wednesday the Tory leader cannot escape talk over her future.
On stage at the start of her Q & A, the chair of the CBI Rupert Soames asked her about her job, now she is 12 months in.
“Do you feel like you are getting better at it?” he asked.
She replied: “Yes.”
But it is a reminder that the Tories are struggling to make hay, even as Labour falters.
