Burnham could double the number of homes that will pay ‘mansion tax’

Policies mulled by Andy Burnham, who is poised to become the UK’s next Prime Minister in the coming weeks, could lead to far more homeowners paying the ‘mansion tax’ announced by Rachel Reeves last year.

It is being speculated that Burnham is considering lowering the threshold for the High Value Council Tax Surcharge from £2 million to £1.5 million, which will see the new tax affect almost double the number of homes in England.

The High Value Council Tax Surcharge was announced in Chancellor Rachel Reeves’s November 2025 Budget, and will apply a surcharge from £2,500 to £7,500 on the value of homes above £2 million from April 2028. The amount due is dependent on where the value of the home falls within defined thresholds.

Burnham may be considering lowering the threshold at which this ‘mansion tax’ applies to £1.5 million once he becomes Prime Minister, an act which property firm Hamptons said would shift the fundamental nature and geographical impact of the tax.

Hamptons said that a national reduction in this threshold would trigger a 102% rise in the total number of taxable homes across England, doubling the policy’s footprint.

Taxing mansions in the North, and family homes in London

Property values are higher in London, where the number of properties caught in the net of the tax would increase by 79%.

In more affordable regions of the country, the effects would be proportionally more extreme. Across the Midlands and the North of England, the number of properties affected by the tax would rise by 150% and 180%, respectively.

Hamptons said that outside London and the South East, a typical ‘mansion’ sits comfortably below the £2-million mark, while lowering the threshold to encompass these properties would also capture smaller family homes in more expensive places such as London.

Due to the nature of property value distributions, lowering thresholds tends to capture exponentially more homes. For example, reducing the mansion tax threshold from £2 million to £1.9 million would tax 17,600 more homes, but lowering it from £1.6 million to £1.5 million would capture an additional 40,300 homes.

Fiscal drag is also a risk. When income tax thresholds are frozen, as they have largely been for the last couple of years, and wages increase with inflation, people ending up paying more tax in real terms as they are dragged past the immobile threshold.

Hamptons warns that if a static threshold is implemented, at £1.5 million for example, and it is not adjusted to account for inflation or nominal house prices, this will lead to more and more people paying ‘mansion tax’ over time.

Amidst these risks, the tax was also announced at a time when the property market is cooling and homes are reversing a long-standing trend by becoming more affordable in many areas of the country.

This has led to the number of homes below £2 million decreasing by 6.6% since the last budget, and Hamptons said the true decline could be even steeper due to how tax thresholds influence market behaviour.

“Lowering the mansion tax threshold to £1.5 million may seem like a straightforward way of boosting Treasury revenues, but the reality is more complex,” said Hamptons lead analyst David Fell.

“It alters the tax’s identity from a concentrated London-centric levy into a broader and more regional tax. The reduction will also capture increasingly modest homes in the capital.”

“Coupled with an accelerating slowdown in prime markets, policymakers may find that the extra revenue raised by squeezing a market that is already adjusting downward quickly disappears from stamp duty and capital gains tax receipts,” Fell said.

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