Should Rachel Reeves increase taxes on expensive homes? How readers voted

Speculation continues to swirl over what chancellor Rachel Reeves could announce in the autumn budget and one of the latest rumours is that she could be planning a tax raid on the owners of expensive homes.

Creating new, higher council tax bands on the most expensive homes is one option that has been considered, according to a number of reports.

The FT reported that this idea has been on the table since being floated by Conservative chancellor George Osborne in 2012.

Council tax is charged on residential properties to help fund for local services, such as schools, rubbish collection and leisure centres. The amount is based on the value of someone's home, with rates running across eight bands of property value. The UK's council tax system is considered hugely outdated, as bands are still based on property valuations from 1991.

Alice Haine, personal finance analyst at online investment service Bestinvest by Evelyn Partners, said: "While targeting the top-end of the market makes political sense for a Labour government, many owners of larger homes are families with tight household budgets or retirees on fixed incomes.

"Higher council tax combined with elevated mortgage costs could make ownership unsustainable for some."

Read more: Rachel Reeves lays the ground for raising taxes in autumn budget

Haine said renters of properties in higher bands would also "feel the pinch, creating knock-on effects for both housing and rental markets".

"Zoning in on council tax may help local authorities repair battered finances, but any decision needs to be considered carefully to ensure affordability, otherwise it risks becoming a case of robbing Peter to pay Paul," she added.

Another option that has reportedly been considered is a 1% annual charge on the value of a property worth more than £2m, dubbed effectively as a "mansion tax".

In a speech on Tuesday, Reeves said that in the budget she would make the "choices necessary to deliver strong foundations for our economy".

When answering questions from journalists after her speech, Reeves refused to say whether she would stick to the Labour party's manifesto pledge of not raising taxes on working people. In this pledge, Labour promised not to increase value-added tax (VAT), income tax and national insurance.

Economists have warned that Reeves will likely need to announce billions in tax rises in the budget to shore up the UK's public finances, with the Resolution Foundation think-tank putting this figure at a potential £26bn.

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Earlier this week, we asked Yahoo Finance UK readers if they believed that Reeves should increase taxes on expensive homes. We received 985 responses, with 36% voting that she should, while 53% disagreed and 11% were undecided on the matter.Should Rachel Reeves increase taxes on expensive homes?

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