Local homeowners could soon see their council tax bills soar under plans being considered by Chancellor Rachel Reeves, with some properties facing charges of up to £10,000 a year.
The proposal would see council tax rates for the highest value homes, in bands G and H, doubled.
A typical band G home currently pays around £3,800 a year. Under the new plans, this could rise to £7,600. Band H households, the highest level, would face an increase from £4,560 to £9,120. In Rutland, the country’s most expensive area for council tax, the annual bill could reach £10,800.
The move is part of Labour’s effort to fill a £30 billion gap in public finances before the Budget later this month. The Treasury has not denied that the plan is being examined, saying only, “We do not comment on speculation around changes to tax outside of fiscal events.”
Concern for Pensioners and Long-Term Homeowners
The idea has drawn sharp criticism from political opponents and housing experts who warn that pensioners on fixed incomes could be unable to afford the rise.
Kemi Badenoch, the Conservative leader, said the proposal would “hammer” pensioners who have lived in their homes for many years.
“Last year Rachel Reeves promised she wouldn’t be back for more taxes. Shamefully, she looks on course to break that promise,” she said.
“Creating new higher council tax bands will hammer people who have lived in the same house for decades, particularly pensioners, some of whom will be unable to pay this new tax and be forced out of their home.
“Instead of putting new taxes on family homes, she should be removing them, as I have said I would do by abolishing stamp duty.
“The Conservatives have a serious, costed plan to cut spending by £47bn and use half to pay down the deficit and half to get our economy growing.
“If Keir Starmer had any backbone, he’d tell his weak Chancellor to steal our savings package, cut tax and get Britain working again.”
Nigel Farage, leader of Reform UK, also attacked the proposal, calling it “another attack on aspiration.” He said:
“It is an assault on assets and will cause huge consternation amongst older people living in properties they bought many years ago.”
Experts Warn of Market Impact
Property professionals have warned that the change could drive more houses onto the market as people look to avoid higher bills.
Lucian Cook from Savills said:
“Asset rich, cash poor households, such as pensioners, would be at the sharp end of this. Families that have lived in properties for a long period of time will have seen their assets go up in value, but that doesn’t mean they can be considered to be wealthy.”
Richard Donnell from Zoopla added:
“Changes in council tax would likely see some homeowners look to sell to reduce costs, which would further add to supply and impact prices.”
Other experts said that many retirees do not have the income to cope with further increases in living costs. “Retirees don’t have the pension provision to cover costs of living these days,” one said. “Higher taxes on them could be the straw that breaks the camel’s back.”
Labour’s Reversal on Council Tax Promise
Before the election, Labour pledged not to change council tax bands, but that commitment appears to have been dropped. Ms Reeves is also believed to be considering other tax rises, including changes to capital gains tax on inherited property and a potential exit tax on entrepreneurs leaving the country.
The government has also floated ideas to restrict benefit claimants from owning luxury cars, which observers see as an attempt to show Labour is willing to tighten spending even while raising taxes elsewhere.
Alternative plans could include adding new tax bands for high-value homes, similar to the system already used in Wales, though officials say this would take years to implement and could prove politically risky.
For now, millions of families will be waiting to see whether Ms Reeves pushes ahead with the plan when the Budget is unveiled later this month. Critics say it risks punishing responsible homeowners and pensioners, while doing little to help communities struggling with the cost of living.
