Rachel Reeves plotting brutal tax raid on homeowners – some could pay £10,000 | Personal Finance | Finance

British homeowners are being warned of a new tax that could cost some up to £10,000 every year. Chancellor Rachel Reeves is set to announce a raft of new measures in her upcoming Autumn Budget as she attempts to fill a £40 billion hole in the public finances.

One of those measures could be a new mansion tax costing thousands of pounds a year. The tax would see the owners of properties worth £2 million or more face a charge of 1 % of the amount by which the property exceeds that value. This means that owners of a home worth £3 million would face a £10,000 bill every year.

As reported by the Daily Mail, property experts have slammed the plans which would distort the housing market. Meanwhile, the Conservative party have called it class-based and counter-productive.

Shadow Chancellor Mel Stride said: “Keir Starmer and Rachel Reeves promised not to raise taxes, now we know they are planning to do just that.

“If Starmer and Reeves introduce a so-called mansion tax, they will be punishing aspiration and hitting hard-working people. This isn’t fairness, it’s class war.

“If Rachel Reeves had a backbone, she’d get a grip of spending – including the welfare bill – instead of raising taxes again and chasing out the very wealth creators our economy depends on.

“Under Labour, nothing is safe – not your job, your home, your savings or your pension. Rachel Reeves will tax your children’s future to pay for her failure.”

The plans are being led by Treasury Minister Torsten Bell. The 43-year-old, who was educated a The Judd School, a super-selective grammar in Kent, worked as Ed Miliband’s director of policy when he included the mansion tax in Labour’s 2015 general election manifesto.

Ms Reeves is also reportedly considering introducing new council tax bands for higher-value properties. Tens of thousands of homeowners could be hit by the move which intends to give extra cash for local authorities.

Meanwhile, Lucian Cook, head of residential research at estate agent Savills, said the mansion tax is a “very blunt and crude instrument”. He said: “There’s a big difference between someone in a £2million house without a mortgage and someone with a sizeable mortgage. So it doesn’t necessarily capture net wealth at all.”

The expert added that it was “very difficult to get accurate valuations” of properties worth over £2 million. This means that administering the tax will be expensive, as valuations will be contested through legal challenges.

Neal Hudson, founder of housing market data firm Residential Analysts, added “There’s a danger this will have some fairly negative impacts. The top end of the market has been stagnating for the last decade already as it’s been hit by higher rates of stamp duty.

“So this will just depress transactions even more. (The Treasury) might make more money from an ongoing tax but you might find there are suddenly a lot of properties priced just below £2million.”

A Treasury spokesman said: “The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy.”

It comes after new polling revealed the collapse in public confidence over the state of the economy. The survey, conducted by former Conservative deputy chairman Lord Ashcroft, showed that just 1% of people think the economy will fare “very well” over the next year.