Why twice as many households could be forced to pay a new mansion tax under Andy Burnham’s latest plans… as our experts reveal exactly who will be affected – and our map of regions most at risk

It was news to strike fear into the hearts of homeowners up and down the country. Plans for a so-called mansion tax could be expanded to draw hundreds of thousands more households into its net.

Today, analysis for Money Mail by tax experts at Tax Policy Associates has revealed exactly who could be affected by this wider levy on homes.

Last November, Chancellor Rachel Reeves announced that homeowners with properties in England worth more than £2million would start paying, what is officially called the High Value Council Tax Surcharge from April 2028.

But Prime Minister-in-waiting Andy Burnham is drawing up plans for a harsher crackdown, extending the scope of this charge to hit properties worth £1.5million and above, this newspaper revealed on Sunday. Experts warn that middle-class families, who live in relatively modest homes and not ‘mansions’ as the term would suggest, would be dragged into Labour’s tax raid as a result.

Those living in the leafy towns around London would be worst hit as £1.5million is the going rate for a four-bed family home in some parts of the capital and its surroundings.

Our figures show that the number of properties having to pay the tax would almost double, from around 127,000 to 243,000.

Here’s a look at the areas where the most homeowners will be clobbered under Burnham’s plans – and what you can do to minimise a tax hit.

Who would be hit

Dan Neidle, founder of Tax Policy Associates, says: ‘The main effect of the £1.5million band is to pull in more of the commuter belt.’

Constituencies such as Esher and Walton in Surrey, Twickenham in south-west London and Harpenden and Berkhamsted in Hertfordshire would each see almost 2,000 more homes caught by the tax net if Burnham were to lower the threshold.

It would also pull in homes in Burnham’s former mayoral jurisdiction of Greater Manchester. With a £1.5million threshold, Tax Policy Associates estimates that 2,400 homes in the area would have to pay the tax, mostly in the affluent Altrincham and Sale West constituency.

However, Greater Manchester would still only account for around 1 pc of the properties subject to the tax.

Nigel Bishop of Recoco Property Search, which helps buyers find high-end homes in south-west England and the home counties, says Burnham’s plans would have a chilling effect on the property market.

‘Rachel Reeves and her mansion tax have managed to stall the property market – Andy Burnham will kill it.

‘He thinks all these people who live in million-pound houses are millionaires but they’re not.’

Mr Bishop says that £1.5million-plus houses could become unsellable, leading to a chain reaction in more expensive property markets which could filter down as far as first-time buyers looking for a modestly priced home.

Analysis by Tax Policy Associates shows that 146,275 homeowners in London would pay the tax under Burnham’s plans, along with 51,999 in the South East.

Wandsworth in south-west London would be the borough with the most homes paying a mansion tax at 25,043, ahead of both Hammersmith and Fulham with 22,344 and Kensington and Chelsea with 19,413.

Thanks to house price inflation over several decades, not all of these properties will be home to wealthy individuals – particularly in areas such as Wandsworth which were not traditionally affluent but have experienced rapid gentrification.

Alex Pugh, chartered financial planner and partner at Saltus, says: ‘A property at this level may be a family home rather than a luxury property, meaning a wider range of homeowners could potentially be affected than the term “mansion tax” might suggest.

‘Many households may be asset-rich but cash-flow constrained, particularly those who are retired or approaching retirement.’

Surrey accounts for nearly a third of the mansion tax-paying properties in the home counties, with 18,023 set to fall into the net.

This is followed by Buckinghamshire and Hampshire with 6,987 and 5,269 homes respectively.

After London and the home counties, the next worst-hit region would be the East of England with 19,115 properties. This region includes Hertfordshire, which incorporates London commuters.

It is followed by the South West at 11,786. Areas where families would pay the tax include Gloucestershire, home to many Cotswolds towns and villages, as well as Bournemouth, Bath and seaside towns in Devon and Cornwall.

A large challenge will be valuing properties accurately for the purposes of the tax.

The property values council tax is based on have not been updated since 1991 and the Treasury has said it will now carry out a ‘targeted valuation exercise’ to identify homes that could be worth more than £2million. If the threshold were lowered to £1.5million, the exercise would have to be expanded.

The process will be similar to how council tax bands are determined, with valuers using Land Registry data, online property listings and even drones to assess a home’s size, layout and location.

But property experts warn that it will be difficult to do this in the next two years for millions of homes across the country – and that the Government will face backlash from homeowners.

Mr Bishop says: ‘It’s an almost impossible task. Anyone who thinks they have got a £2million home will argue that it is worth a bit less. There will be an inordinate amount of challenges to this.’

Bands could be raised even further

Under current plans, homes valued at between £2million and £2.5million will have a £2,500 a year charge to pay on top of their regular council tax bill from April 2028.

For those valued at £2.5million to £3.5million it will be £3,500, and £5,000 for homes worth £3.5million to £5million. Properties worth more than £5million will pay £7,500. The money will go to the Treasury, rather than to councils and is expected to raise £400million per year.

Any further expansion of the plans could see a new band for homes valued at between £1.5million to £2million introduced at a new lower level – or all bands forced to pay more.

But tax expert Neidle warns that charging people in homes worth £1.5million to £2million less than that amount ‘would not raise a great deal of extra money’.

He envisages homes valued at between £1.5million and £2million paying the current lowest charge of £2,500 and the charges for the existing £2million-plus bands all being pushed upwards.

If the charge was stepped up rather than an extra lower band added, he says, the tax take could double to £800million per year – an option that Neidle says will be tempting for Burnham.

This would see people in £2million to £2.5million homes paying £3,500 instead of £2,500; those in £2.5million to £3.5million homes paying £5,000 instead of £3,500; those in £3.5million to £5million homes paying £7,500 instead of £5,000 and those in £5million-plus homes paying a new top rate of £10,000.

While this would raise more for the Treasury, Neidle criticised the idea that a new tax would be tinkered with before it was even introduced.

‘Tax systems need stability. Expanding a tax before it’s even been introduced is, in our view, the opposite of stability,’ he says.

What can you do?

No expansion of the mansion tax plans has been announced and Burnham has not even made it into office yet. However, for those who live in homes worth around £1.5million, there are a few things to consider for the future.

First, it is worth working out how much your home is really worth. Look at similar properties on websites such as Rightmove or Zoopla, or ask a local estate agent to value it – and bear in mind their figure is likely to be optimistic as they are keen to secure your business.

Second, you may not need to pay any mansion tax upfront. The Government is consulting on a deferral scheme which would see those who are property rich but cash poor able to put off paying the tax until they sell the home. This would see them hit with the full bill at once and interest could also be charged.

It should also be possible to appeal your valuation if you feel your home should not be eligible for the tax but full details on how this would work have not yet been disclosed.

As an extreme measure, homeowners may consider taking steps to make their homes less valuable. This could include selling part of a large garden or deliberately not carrying out repairs or clearing up clutter to make a home look a bit rougher around the edges.

However, buying agent Bishop thinks this will be a tough ask for house-proud Britons.

He says: ‘It is very difficult to devalue a home. The English have a mindset of, we will buy a house and we will improve it – it is hard to do that in reverse.’

Downsizing would be another option to consider. Financial planner Pugh says families should consider how paying the surcharge would affect their overall financial position, rather than moving home as a knee-jerk reaction to the tax.

She says: ‘A property should not be viewed in isolation and homeowners should consider how their home fits alongside their pension arrangements, investments, income needs and longer-term plan.’

Are you concerned about how Andy Burnham’s tax plans might affect you? Email moneymail@dailymail.co.uk