Reports that the government is planning to lower the threshold of its new mansion tax from £2m to £1.5m have been met with frustration from Wandsworth Council as well as neighbouring Richmond.
The change would bring an additional 6,500 households in the borough into the tax, 2,100 from Putney, and load another tax barrier onto residents after the government’s Fair Funding Review has already led Wandsworth to announce a 94% council tax increase.
The idea was first reported by the Mail on Sunday in July, and a Whitehall source has since told the paper it is seen as “the most viable option”. This month, government sources also told The Times it was a “live discussion” in the Treasury. Another source said there were concerns it would hit more modest homes in London, and that no decisions had been taken.
Wandsworth’s leader, Cllr Robert Morritt, said it was “astonishing that the Government appears to be doubling down”. “For many of our residents these aren’t mansions they are simply family sized homes.” Richmond’s leader, Cllr Gareth Roberts, said the owners “are not responsible for the government’s budget shortfall, and they should not be seen as an easy target just because of their postcode”.
The council tax rise, planned for April 2027, grows with the band. It is £958 a year at Band D, about £1,600 at G and £1,900 at H. The mansion tax would then add at least £2,500 a year from April 2028. A home in either band that is caught by it could be paying more than £4,000 a year extra within two years.
A valuable house does not always come with the income to match, and the government’s own plans accept as much. It has proposed letting owners with household incomes of £35,000 or less, or savings of £16,000 or less, put off paying until they sell.
The mansion tax, officially the High Value Council Tax Surcharge, was only announced last November. It does not start until April 2028 and is not yet law. “Expanding a tax before it’s even been introduced is, in our view, the opposite of stability,” says Tax Policy Associates, a tax research group. On its estimates, only eight constituencies in England would see more homes newly caught than Putney. Among council areas, only Surrey and Hammersmith and Fulham would see more than Wandsworth.
Wandsworth’s press release also says “around 12,500 households could be liable for the tax”. Richmond’s statement gives its 9,200 as the total after the change. In Putney, with a £1.5m threshold, 4,152 houses would be included, 2,110 of them new.
As announced, the tax is a yearly charge on owners, not tenants, of homes in England worth £2m or more. It runs from £2,500 up to £7,500 above £5m. If the threshold falls, Tax Policy Associates assumes the £2,500 charge would start at £1.5m, with every higher charge going up. Cllr Morritt said “not a single penny raised from this tax would come back to support local services”. The government says the money “will support funding for local government services”.
What happens next
- The Treasury does not routinely comment on speculation, and any change would normally come at the Budget on Wednesday 28 October.
- The council tax rise will be settled when Wandsworth sets its budget in March. Work out your new council tax bill.
- Homes will be valued by the Valuation Office at 2026 prices, and the first mansion tax bills are planned for March 2028. The details are in the government’s consultation on the tax.
