The Prime Minister, Boris Johnson has scrapped plans for an annual high value property tax. The new, so-called ‘mansion tax’ similar to a scheme in New York, was due to be announced in next month’s budget.
Exact thresholds at which homeowners would pay the tax had not been announced. However, the aim was to generate revenue to help ‘level up’ areas of the country, previously short on investment.
With only genuine mansions affected by the tax in most of the north, the policy was thought to appeal to the new wave of Conservative voters in former Labour heartlands. However, it has brought a backlash from grassroots Tories – an issue for Mr Johnson despite his 80-seat parliamentary majority.
Critics, including estate agents and Conservative MPs, believed the tax would unfairly penalise Londoners, who pay more for even modest homes as a result of higher property prices. In some areas of London up to 65% of homes are valued at more than £1 million.
It was also seen as a problem for homeowners who are asset-rich but cash-poor, such as pensioners who could be forced to sell the family home to pay the tax.
The tax had previously been discussed with former Chancellor, Sajid Javid, who resigned last week. A national revaluation of council tax bands, which could have left millions of households with higher bills, has also been shelved with both policies said to be “highly unlikely” to feature in the first budget from Mr Javid’s successor, Rishi Sunak.
The budget was due to be delivered on 11 March but may be postponed following the appointment of Mr Sunak, who would have had less than a month to formulate his plans.