How much is the mansion tax and who will have to pay it?

Rachel Reeves has announced a mansion taxation connected homes worthy much than £2 million.

The "high worth assembly taxation surcharge" volition use successful England from 2028 and volition rise £400m a twelvemonth for the government, the chancellor said successful Wednesday's budget.

Homeowners volition person to wage the yearly complaint connected apical of their assembly taxation bill.

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The determination was wide rumoured earlier the budget, but what is notable is different connection expected to beryllium announced was not.

Ms Reeves was expected to present a re-evaluation of homes successful the 3 highest assembly taxation tiers (F, G and H), with a surcharge connected them.

She did not denote this, but alternatively said determination volition beryllium 4 bands for the caller mansion tax, with values based connected 2026 prices.

The lowest band, for properties worthy betwixt £2m and £2.5m, volition wage £2,500.

The highest band, for homes worthy £5m oregon more, volition wage £7,500.

Ms Reeves and the Office for Budget Responsibility (OBR) did not uncover the 2 mediate bands and charges.

But she said the surcharge would beryllium uprated annually by the Consumer Price Index (CPI) inflation.

The other gross volition spell consecutive to cardinal government, not to section councils, arsenic is the lawsuit for modular assembly tax.

Ms Reeves said the complaint would use to less than 1% of each properties, and would assistance "deal with a long-standing root of wealthiness inequality".

There volition beryllium a consultation connected enactment for homeowners and a deferral strategy for those incapable to wage immediately, taking into relationship homes bought decades agone that person soared successful value.

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The OBR said it was highly uncertain astir the £400m it predicted the taxation would rise each year, and would set the forecast, if needed, aft the consultation.

Paul Johnson, erstwhile manager of the Institute for Fiscal Studies, said the bands would make "big spikes astatine circumstantial valuations".

Rob Hillock, caput of idiosyncratic fiscal readying astatine fiscal services consultancy Broadstone, said: "The chancellor's instauration of a 'mansion tax' connected houses valued supra £2m volition apt punctual galore homeowners to get an up-to-date valuation of their spot wealth.

"It has the imaginable to make marketplace distortions arsenic homeowners look to trim the worth of their location to debar further taxation oregon punctual immoderate to downsize to smaller, cheaper homes.

"The OBR notes successful its comments that the betterment could spot terms bunching beneath each of the 4 caller terms bands arsenic homeowners look to minimise their taxation liability."

Mark Campbell, caput of wealthiness astatine fiscal consultancy Isio, said the mansion taxation makes a "flawed assumption" that those surviving successful homes worthy much than £2m person the liquid wealthiness oregon income to wage the tax.

He said it risks penalising radical who are asset-rich and cash-poor, particularly successful London and the southeast.

He besides warned the mansion taxation risks sending a connection that the UK is simply a little charismatic spot for investors, wealthiness creators and entrepreneurs.