Council tax hike on luxury homes will fund cuts for lower bands, think tank says

The Institute for Public Policy Research, known to hold sway over Government policy, has suggested a 100 per cent hike in council tax for those living in the luxury Band H properties, typically valued at over £1.5 million.

It also argued that levies on Band F and G properties should ramp up by 50 per cent, while those in the most affordable brackets should see their bills slashed.

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According to IPPR's research, the changes could deliver nearly £4 billion to the public coffers, allowing £1bn to be reinvested to provide average savings of £45 for the 80 per cent of A to D band households.

This would rebalance the system, which the think tank claims has become unfair, with residents of smaller, more affordable properties taking on a disproportionately larger burden.

For example, residents in plush west London borough of Kensington pay less tax on average than those in Blackpool, despite owning higher-value properties.

Aditi Sriram, IPPR economist and principal author of the research, said: "The current council tax system is unfair, inefficient, and long past its sell-by date.

"Our proposal cuts bills for the vast majority of households while asking those with the greatest property wealth to pay a fairer share. It's a reform that supports working families, strengthens local services and lays the foundations for a fairer tax system."

The IPPR also proposed hiking the tax on overseas purchasers buying UK properties from 2 per cent to 6 per cent.

Their paper further argued that the entire property taxation system requires an overhaul, including a comprehensive council tax revaluation by the end of this Parliament, with a view to clearing the path for a "proportional" property tax.