Families could soon be hit with council tax bills of up to £10,000 a year under plans reportedly being considered by Chancellor Rachel Reeves, as Labour searches for ways to plug a £30 billion black hole in the public finances ahead of this month’s Budget.
According to reports, Ms Reeves is weighing up proposals to double council tax rates on the highest value homes, those in bands G and H, in a move that would overwhelmingly hit households in London and the South East.
Under the plan, a band G property could see its annual bill soar from £3,800 to £7,600, while those in band H could face a rise from £4,560 to £9,120. The highest bills would reach around £10,800 a year in areas such as Rutland, making them among the most expensive in the country.
Critics have described the idea as yet another tax raid on middle England, warning that pensioners and long term homeowners could be driven out of properties they have lived in for decades.
“Forced Out of Their Homes”
Opponents argue that the plan would punish those on fixed incomes and amount to an assault on aspiration. Kemi Badenoch, the Conservative leader, said the proposed rise would “hammer” pensioners living in modest circumstances but valuable properties.
“Last year Rachel Reeves promised she wouldn’t be back for more taxes. Shamefully, she looks on course to break that promise,” Ms Badenoch said.
“Creating new higher council tax bands will hammer people who have lived in the same house for decades, particularly pensioners, some of whom will be unable to pay this new tax and be forced out of their home.
“Instead of putting new taxes on family homes, she should be removing them, as I have said I would do by abolishing stamp duty.
“The Conservatives have a serious, costed plan to cut spending by £47bn and use half to pay down the deficit and half to get our economy growing.
“If Keir Starmer had any backbone, he’d tell his weak Chancellor to steal our savings package, cut tax and get Britain working again.”
Nigel Farage, leader of Reform UK, described the proposal as another “attack on aspiration,” saying:
“It is an assault on assets and will cause huge consternation amongst older people living in properties they bought many years ago.”
A Convenient but Costly Fix
Labour sources suggest Ms Reeves views a council tax hike as one of the simplest ways to raise revenue without a nationwide revaluation, a politically explosive move that could drag millions more homes into higher bands.
A proposal by the Institute for Fiscal Studies to double the top two bands could bring in around £4.2 billion annually by the end of the decade. Around 4 per cent of households would be affected, mostly concentrated in wealthier parts of southern England.
The Treasury declined to deny that the idea is under review, saying only:
“We do not comment on speculation around changes to tax outside of fiscal events.”
Ms Reeves is also understood to be exploring a series of other controversial measures, including a capital gains tax raid on inherited property, an exit tax on entrepreneurs leaving Britain, and restrictions on benefit claimants owning luxury cars, part of an apparent attempt to offset criticism of her broader tax rises.
Experts Warn of Fallout
Property experts warn that the move could lead to a sell off among older homeowners and distort the housing market.
Lucian Cook of Savills said that “asset rich, cash poor households, such as pensioners, would be at the sharp end of this” and that owning a valuable property “doesn’t mean they can be considered to be wealthy.”
Richard Donnell of Zoopla added that higher council tax bills could push some homeowners to sell, increasing housing supply and putting downward pressure on prices.
“Changes in council tax would likely see some homeowners look to sell to reduce costs, which would further add to supply and impact prices,” he said.
Experts have also warned that the policy risks penalising those without the income to sustain such costs. “Retirees don’t have the pension provision to cover living costs these days,” one noted, adding that higher taxes “could be the straw that breaks the camel’s back.”
Labour’s Broken Promises
Before the election, Labour had pledged not to change council tax bands. That promise has since been quietly abandoned, as Ms Reeves looks for politically convenient ways to raise cash.
Alternative models, such as adding new bands above the current system, mirroring Labour’s approach in Wales, are also being examined. But whichever path is chosen, the consequences are likely to fall hardest on homeowners in the South East, while the North remains largely unaffected.
Official figures show that nearly two thirds of England’s 154,000 band H properties are in London and its commuter belt, while only 1,560 such homes exist in the entire North East.
Ms Reeves is not expected to finalise her decision until after November 21, when the Office for Budget Responsibility delivers its latest forecast.
Until then, millions of homeowners across the South can only wait, and brace for what many see as yet another Labour raid on the property owning classes.
