Rachel Reeves has been encouraged to initiate a comprehensive revaluation of council tax properties in the upcoming budget, particularly as she prepares to introduce a new levy on higher-value homes. Currently, council tax is based on property valuations conducted in 1991, and the Treasury is believed to be considering updates for properties in the top three council tax bands (F to H).
Under the proposed changes, properties valued above a threshold—expected to fall between £1 million and £2 million—could be subject to a flat annual levy of £2,000 to £3,000 in addition to existing council tax bills. This charge, commonly referred to as a “mansion tax,” would contribute revenue directly to the Treasury.
Experts from the Institute for Fiscal Studies (IFS) have expressed concern that partial revaluation could complicate the tax system. They suggest that if a revaluation is to be conducted, it should encompass all properties rather than just a select few. There are questions regarding the longevity of a system based on 1991 valuations.
The New Economics Foundation also emphasizes the need for a reassessment of property taxes, cautioning that an inconsistent approach could exacerbate existing inequalities. Some Labour MPs have raised concerns about the potential impact on their constituents, particularly those who are “asset-rich, cash-poor.”
Reeves has indicated that higher earners should contribute more to funding public services, but the specifics of the threshold for the new levy remain undecided. This policy aims to make the council tax system more equitable while adhering to Labour’s tax commitments.
The Treasury has not commented on speculation surrounding these changes, and estimates suggest the property charge could generate under £1 billion annually. Other proposals, such as a more radical approach by the Institute for Public Policy Research, have suggested raising more funds while also decreasing council tax for lower-valued properties. The implementation timeline for Reeves’ plan remains uncertain, with provisions likely including a “deferral” scheme to alleviate financial pressures on homeowners.
Source: https://www.theguardian.com/money/2025/nov/20/reeves-urged-to-grasp-the-nettle-with-wholesale-reset-of-council-tax