Rachel Reeves imposes mansion tax on properties over £2million in Autumn Budget
The high-value council tax surcharge is expected to raise £0.4 billion for the government
Rachel Reeves is set to impose a mansion tax on properties worth over £2million as part of her Autumn Budget.
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The tax was announced ahead of Rachel Reeves's big reveal in Parliament, after the Office for Budget Responsibility (OBR) leaked the Chancellor's proposed policies early online.
The council tax surcharge is set to raise an estimated £0.4billion for the government in 2029-30, according to the OBR.
The introduction of the annual council tax charge - widely dubbed the 'mansion tax' - will mean that from April 2028, owners of properties valued at over £2million will now face the annual surcharge.
Properties liable for the new tax will be determined following an evaluation by the Valuation Office and based on 2026 prices, the government revealed.
It comes after the unexpected OBR leak revealed that the UK's gross domestic product (GDP) would grow by 1.5% this year, an increase from its earlier 1% forecast.
Read more: Treasury watchdog plunge Reeves’ Budget into turmoil after leaking £26bn tax rise
The Budget also saw the two-child benefit cap scrapped, ISA allowances notably reduced and income tax bands frozen.
According to the leaked OBR document, the new council tax charge will be an addition to existing council tax requirements.
The additional £0.4billion generated from the new tax will be directed straight to central government, rather than being distributed to local government in-line with current council tax rules.
Four price bands
The new mansion tax is set to be split into four price band brackets.
Properties in the lowest £2 million to £2.5 million band will face a surcharge of £2,500.
Further tax bands will extend upwards, with the highest band of £5 million or more set to face a charge of £7,500.
The brackets will be uprated by CPI inflation each year, according to the OBR.
The new property tax is set to form part of the government's £26billion of tax hikes in order to fill a multi-billion black hole in the UK economy.
The documents, which were revealed just minutes after Ms Reeves brandished her red box outside 11 Downing Street, showed that tax is due to rise by £26billion.
It also saw income tax thresholds frozen for another three years.
The leak came 26 minutes before Chancellor Rachel Reeves began her Autumn Budget speech, which began at around 12.30pm, following Prime Minister's Questions.
The OBR subsequently apologised and launched an investigation after its economic and fiscal outlook document was published early.