John Healey 'drops' plans to extend Labour's mansion tax to more homes in Budget after outcry at retrospective raid

Labour looks to have dropped plans to extend the so-called 'mansion tax' to thousands more homes at the Budget. 

Chancellor John Healey was widely believed to be considering reducing the threshold for properties paying the levy from £2million to £1.5million. 

That would have doubled the number of properties hit by the raid to 272,000, with analysts warning a staggering one in four detached homes in London would be brought into scope.

The charges of up to £7,500 a year would also fall even more disproportionately on the capital and the South East, as four-fifths of those affected would be there.

The idea had sparked alarm among some Labour MPs, with former Treasury minister Rachel Blake among those voicing concerns. 

However, Mr Healey now appears to have concluded that expanding the levy - which is due to take effect in 2028 - would be too controversial.

The Sunday Times said Mr Healey was keen to build a public consensus around the charge before increasing it.

Estate agents have cautioned that the proposals have already dealt a hammer blow to the property market in London.

Shadow chancellor Andrew Griffith used Tory conference last week to vow to reverse the mansion tax if the party wins power.

Kemi Badenoch also sought to burnish the Conservatives' credentials as the party of home ownership, promising to take main homes out of inheritance tax altogether. 

Former chancellor Rachel Reeves announced the council tax surcharge on homes worth £2million or more last year. 

Under the Government's current plans from April 2028, homes valued between £2million and £2.5million would be forced to pay an extra £2,500 a year.

The bill would rise to £3,500 for properties worth £2.5million to £3.5million, and to £5,000 for homes worth between £3.5million and £5million. 

Homes valued at more than £5million would face a £7,500 charge.

The levy is expected to raise around £400million in its first year, but the Treasury estimates it will cost at least £350million to implement.