An estimated 165,000 homeowners will be drawn into Labour’s planned “mansion tax” in its first year, according to new figures from the Office for Budget Responsibility (OBR), raising fresh questions about the growing tax burden on property owners.
The policy, championed by Chancellor Rachel Reeves, will come into force from April 2028 and apply to homes valued above £2 million. Affected households will face an additional annual charge on top of existing council tax liabilities.
Official forecasts suggest the measure will generate around £400 million in the 2028–29 financial year, rising to £435 million by the end of the decade.
However, the plans are already being criticised as another example of Labour’s widening tax net, particularly for homeowners in London and the South East, where property values are significantly higher. Properties in council tax bands F, G and H will be reassessed, pulling more households into higher charges.
Under the proposed system, homeowners will be divided into four valuation bands. Those with properties worth between £2 million and £2.5 million will pay an additional £2,500 annually, while owners of homes exceeding £5 million will face charges of up to £7,500 a year. The thresholds will rise in line with inflation.
Estimates indicate that around 71,000 homes will fall into the lowest band, with a further 79,000 properties valued between £2.5 million and £5 million. Approximately 15,000 households will be hit by the top rate, accounting for over £100 million of the projected revenue.
Despite the scale of the policy, the OBR expects widespread challenges to property valuations. As many as 40 per cent of affected homeowners are forecast to successfully appeal their assessments, reflecting what officials describe as the difficulty of accurately valuing high-end properties within narrow bands.
The anticipated volume of appeals raises questions about the administrative burden of the scheme, as well as the reliability of the revenue forecasts.
Critics argue the measure reinforces a broader trend of increasing taxation under Labour, targeting asset-rich households and, they say, discouraging aspiration and investment. With mounting pressures from multiple tax changes, concerns are growing that such policies risk accelerating the departure of high earners and wealth creators from the UK.
Supporters of the policy, however, maintain it is a fair way to ensure those with the most valuable properties contribute more.
The Treasury has yet to respond to concerns about implementation challenges or the potential behavioural impact on homeowners.
