Wandsworth’s leader joins revolt against new mansion tax

Wandsworth’s council leader has joined three other London boroughs in telling the Chancellor to scrap the government’s new mansion tax.

The four councils say their residents alone could end up paying around £270m of the tax a year – more than half of what it is expected to raise across the whole country. Kensington and Chelsea, Westminster, Richmond and Wandsworth wrote to Chancellor John Healey this week arguing the policy hits the wrong people.

“Wandsworth Council won’t get to keep a single extra penny raised,” said council leader Robert Morritt. “This is an unfair attack on well-run councils like ours, with Wandsworth residents hammered to pay for those elsewhere.”

Cllr Elizabeth Campbell of Kensington and Chelsea, who organised the letter, was just as clear: the tax “lacks nuance” and will “hit pensioners, families and long-standing residents whose homes have risen in value while their incomes have not.”

What the tax is and why it was created

Council tax bands in England are still based on what a property was worth in 1991. Three and a half decades of wildly uneven house price growth later, the result is that a Band D house in Darlington or Blackpool worth about £400,000 pays £2,400 to £2,600 a year while a £10m house in Mayfair pays around £2,100.

The High Value Council Tax Surcharge is designed to close that gap without reopening the whole council tax system. From April 2028, owners – not tenants – of homes in England worth £2m or more pay an extra flat charge on top of their normal bill: £2,500 a year at £2m, rising to £7,500 above £5m. The Valuation Office is revaluing properties now, using 2026 prices. Roughly 165,000 homes are expected to be caught in the change.

The money does not stay where it is collected. Councils bill it and collect it but then send it to the Treasury, which says it will then use it to fund local government generally. That is the basis of the councils’ first objection: calling it a council tax surcharge is “disingenuous” when no borough keeps a penny.

Half the country’s bill, from four boroughs

England’s £2m-plus homes are extraordinarily concentrated: around 90% sit in London and the South East, and Kensington and Chelsea and Westminster between them account for roughly a quarter of the entire national stock, according to valuation firm e.surv. Those two boroughs’ homes also cluster in the top band, which pays three times the bottom one. Add Richmond and Wandsworth – both full of the £2m-plus family houses that are ordinary streets locally and a “mansion” only to the Valuation Office – and a very large share of the national bill lands in four town halls.

The councils have not published how they got to £270m (and Richmond claims it is even higher at £275m) but with the government forecasting the surcharge will raise about £430m a year – which is 63% of it. That £430m is already reduced from a raw estimate of £605m, because the budget watchdog assumes roughly a third of the money will vanish through appeals, avoidance and owners bunching prices below the band thresholds. If you take that raw figure, £270m is 45% – just under half.

Who actually pays

The measure has been criticised for charging people tax they can’t afford (you may own an expensive house but that doesn’t necessarily translate to having large amounts of disposable income), to which the government’s answer has been a deferral scheme: you put the charge off until you sell or die, with interest, secured against the house. The councils’ second objection is about who qualifies for that scheme.

Under the proposals, deferral is open to households with income of £35,000 a year or less, or savings under £16,000. Two people working full time on the London Living Wage – £14.80 an hour – earn £57,720 between them. They would be roughly £22,000 over the line, and they would have to find the money.

Around 4,000 Putney homes are likely to fall in scope, with Priory Lane the most exposed street at an average £6.93m a property.

The councils’ third complaint is procedural: the government has not told them how they are supposed to run any of this. The consultation on the design closed on 14 July. Ministers have not yet published a response.

The four council leaders say they are “speaking with one voice” and want the government to “pause, listen and think again.” There is no confirmed date for a reply.