Boris Johnson faces Tory backlash over claims Budget could include new ‘mansion tax’ and pensions raid to fund public spending splurge
- Cuts to pension tax relief also being looked at by PM and Chancellor Sajid Javid
- Extra tax on expensive properties has been referred to as ‘recurring wealth tax’
- One possible version of tax is added council tax band for more expensive houses
Boris Johnson is facing a Tory backlash amid claims he will impose a ‘mansion tax’ on Britain’s most expensive homes to fund a huge spending splurge.
There is also mounting speculation pension tax relief will be slashed to help pay for pledges to boost public services
However, the dramatic moves – being mooted for the Budget next month – are already facing significant resistance from Conservative MPs who warned they would hit ‘aspiration’.
Insiders say the package being put together by PM and Chancellor Sajid Javid will be wide-ranging and bold, as they seek to demonstrate their determination to bring real change after Brexit.
After the Tories swept traditional Labour ‘Red Wall’ seats to win the election, Mr Johnson is keen to show he is spreading wealth and opportunity outside of London and the south.
Prime Minister Boris Johnson is considering imposing a ‘mansion tax’ on Britain’s most expensive homes. Pictured: Mr Johnson on Thursday
How do council tax bands work and are they outdated?
Current council tax bands were established in 1991, ahead of a new council tax being introduced in 1993.
As time was short, Government workers were enlisted to slowly drive up and down streets, estimating bedroom numbers and house values.
Estate agents were often used to give a rough idea of the price of homes.
The property price estimates were then put into bands. For England and Scotland the bands are A to H.
If you own a property in England that sold for less than £40,000 in April 1991, it is band A. Most properties are in bands D and E – valued at the time between £68,000 and £120,000. The top band, H, is for homes valued at more than £320,000.
However it might be that your home was put into the wrong band from the outset.
Ways of raising revenue from better-off homeowners are believed to have been discussed at the highest levels in the Treasury.
The shape of the extra tax on properties has not been finalised, but it has been described as a ‘recurring wealth tax’, according to The Sunday Telegraph.
One idea tax is an added council tax band for even more expensive properties than those fitting in the H band now.
It comes after reports that the Treasury is considering slashing pension tax relief to 20 per cent – from 40 per cent – for those making equal to or more than £50,000.
This would raise an extra £10billion per year.
Sources told MailOnline it was still a ‘long way to the Budget’.
A Treasury spokesman said: ‘While we keep all aspects of the tax system under review, we do not speculate ahead of the Budget.’
Any effort to target owners of expensive homes is likely to face strong resistance.
Many householders in London have benefited from rocketing price rises, but while they are asset-rich they do not have money available to pay such taxes.
Telford MP Lucy Allan warned against imposing a ‘penalty on endeavour’. ‘Hard work being rewarded maximises aspiration, effort and achievement. A low tax environment increases the tax take,’ she posted on Twitter.
Former Cabinet minister John Redwood said: ‘The Budget must be full of optimism, promoting growth and encouraging more transactions and people to spend their wealth and income, not to destroy it.’
Chief executive of the TaxPayers’ Alliance John O’Connell said: ‘It seems to be a misunderstanding of what the Tories’ new voters were looking for.
‘They may be new converts to the message, but they still expect the Conservatives to be the ones backing them when they succeed.
‘Levelling up doesn’t mean cutting other people down.’
Major cuts to pension tax relief are also being looked at by the Prime Minister and Chancellor Sajid Javid (pictured) ahead of the looming March Budget