Homes worth £1.5 million will avoid being hit with Labour’s new mansion tax after John Healey is said to have rejected proposals to lower the threshold in his upcoming budget, reports BritPanorama.
The tax was announced by Rachel Reeves last year, with homes in England valued at £2 million and above set to be hit with an annual levy that will start at £2,500 on properties just over £2 million and rise to £7,500 for those worth more than £5 million.
While there was speculation that Mr. Healey was weighing up cutting the threshold to £1.5 million to raise more revenue, sources informed The Times that the chancellor believes changing the rules before the surcharge begins in April 2028 would risk undermining public support for the reform.
Lowering the threshold to £1.5 million would have increased the number of homes affected by the new tax from 134,000 to 271,000.
His decision to reject such a move comes after Tory leader Kemi Badenoch placed homeownership at the centre of her Conservative Party Conference speech, promising to abolish death duties on all “family homes” and allowing couples to leave behind an additional £1 million tax-free. She also pledged to scrap the mansion tax on properties in England.
“The Conservatives are and always have been the party of home ownership. We understand why putting roots down and having a stake in society matters,” she stated at the conference.
Mr. Healey faces increasing pressure to either raise taxes or cut spending at next month’s Budget, as soaring borrowing costs due to the Iran war and weaker growth have wiped billions off the government’s fiscal headroom.
However, despite this challenging backdrop, new forecasts from the International Monetary Fund showed that the rise of artificial intelligence is driving an increase in economic growth in the UK, providing a boost to Mr. Healey ahead of his first budget.
The recent report indicates that Britain’s economic outlook has improved more than most other major economies in the past six months.
In its latest World Economic Outlook, the IMF projected that UK GDP is set to grow by 1.3 per cent in 2026 — an upgrade of 0.5 points from its April forecast, despite the protracted energy shock triggered by the Iran war.
The Treasury has been contacted for comment.
