By Local Democracy Reporter John Wimperis: The Labour government’s plans to introduce a ‘mansion tax’ on homes over £2m have been branded “completely unfair” by the Bath councillor who could have to deal with collecting it.
Owners of properties worth over £2m could soon have to pay between £2.5k and £7.5k a year as a “high value council tax surcharge,” under the government’s plans. The sum — which for some Bath homes would be more than they currently pay in council tax — would be collected alongside council tax but would go straight to the government, not local council coffers.
Mark Elliott (Lansdown, Liberal Democrat), as Bath and North East Somerset Council’s cabinet member for resources, is the councillor who deals with its finances and council tax setting. He told the Local Democracy Reporting Service: “It’s unclear exactly what the so-called ‘mansion tax’ will really mean for B&NES residents.
“Like all other councils, we’re awaiting details from the government. So far, this looks less like a council tax increase and more like a workaround to boost central government income while sticking to the letter (if not the spirit) of Labour’s tax pledges.
“The proposal may see owners — not residents — of houses with a recalculated value of over £2m paying an additional sum. This would then be diverted off to plug holes in central government’s national spending commitments. This seems completely unfair.
“Local council tax payers quite rightly expect their council tax to go to their council to fund essential local council services. That’s highways and bin collections, as well as vital social care services, on which so many vulnerable people rely.
“Most people agree council tax needs to be reformed, and I would welcome a genuine move to do that. This is not a council tax reform. It’s not really council tax at all. It is a sticking plaster for tax promises the government made without a proper plan.”
There have long been calls to reform council tax which is calculated on 1991 property values and, unlike income tax, is not based on people’s ability to pay. But it remains a hugely important way for councils to generate income in a time when government funding has reduced.
In recent years, Bath and North East Somerset Council has increased its council tax by the maximum 4.99% permitted without a local referendum as, like other councils, it faces a “significant and unpredictable” bill for social care. A band H home in Bath currently pays £4,429.08 a year in council tax once all precepts are applied.
The government expects that less than 1% of homes across in England will have to pay the new mansion tax. In Bath, the city’s Georgian townhouses can often fetch more than £2m. One home on the iconic Circus is currently on the market for £3.9m.
Unlike council tax, however, it is property’s owners, not their residents, who will have to pay the high value council tax surcharge. The tax is expected to bring in £430m for the government each year.
The government will compensate local authorities for the cost of collecting the tax. The government plans to introduce the tax in April 2028, with a public consultation on the details to be held next year.
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Bath Voice and Local Democracy Reporters
The journalists are funded by the BBC as part of its latest Charter commitment, but are employed by regional news organisations. A total of 165 reporters are allocated to news organisations in England, Scotland, Wales and Northern Ireland including Bath Voice. These organisations range from television and radio stations to online media companies and established regional newspaper groups. Local Democracy Reporters cover top-tier local authorities, second-tier local authorities and other public service organisations.
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