Chancellor Rachel Reeves is examining plans for a new property surcharge that could see around 300,000 homeowners in England’s highest council tax bands facing additional annual charges as the Treasury looks to plug a £40 billion gap in the public finances.
The measure, expected to raise about £600 million a year, would apply to homes in bands F, G and H, concentrating its impact on middle-class households in London and the South East.
The surcharge would sit alongside existing council tax bills, with Band F homes – which currently attract average annual charges of £3,293 – likely to see increases running into the hundreds of pounds. Owners of the most expensive properties could face extra costs running into the low thousands.
The proposal forms part of a wider reassessment of 2.4 million higher-band homes across England over the coming years – roughly one in ten properties.
HOUSING REVIEW
Government data indicates that 26 local authorities will see more than a quarter of their housing stock reviewed. In London, Westminster will have 59,000 homes reassessed, while Kensington and Chelsea will see reviews of around 46,000 properties.
Buckinghamshire faces the largest single reassessment, with more than 65,000 homes affected.
Treasury officials had previously modelled an increase in income tax of 2p in the pound, offset by a matching cut to National Insurance but the Office for Budget Responsibility concluded the measure would not deliver the expected revenue.
The Chancellor has since confirmed that income tax rates will remain unchanged.
CLASS WAR
Last week market reaction was volatile. Government borrowing costs climbed on Friday, with the 10-year gilt yield rising to 4.57%, while the FTSE 100 slipped 1.1%.
Sir Mel Stride, the shadow chancellor, criticised the emerging plans as “a class war against middle England”, arguing they would “punish aspiration and hit hard-working people”.
Reeves has said forthcoming decisions will be “fair”, with further measures expected on landlords, asset-based tax arrangements and gambling duties.
The Chancellor aims to build a £15 billion fiscal reserve as part of the Autumn Budget on November 26.
