Labour right urge Starmer to halt mansion tax plan

Keir Starmer is being urged to stand up to the left of his party as a battle rages within the government over whether to impose a mansion tax in next month’s Budget, which some fear could have a severe impact on the housing market.

- DAVID MADDOX POLITICAL EDITOR

The chancellor, Rachel Reeves, is understood to be seriously considering the proposal for her 26 November statement as she attempts to not only fill a £40bn black hole in her finances but also find more than £10bn of headroom to deal with future shocks.

She and the prime minister are being warned that, with the flight of millionaires from the UK already hitting the economy, a mansion tax would have disastrous effects.

Ministers want Sir Keir to step in, with one source saying: “It is patriotism versus prejudice; what is good for the country versus a hatred of success and wealth.”

Previously, The Independent revealed that cabinet ministers were already unhappy about the “anti-aspiration” taxes of VAT on independent school fees and abolishing non-dom status.

They say the impact on London in particular has been stark, and there are genuine fears among senior cabinet ministers that there could be a major flight of capital from the UK. Now divisions have opened over a proposed tax on the higher-value properties.

The proposal, which came from the Resolution Foundation think tank - whose former head, Torsten Bell, is now a pensions minister - would mean owners of properties worth at least £2m facing an annual charge of 1 per cent of the amount by which it exceeds that value. Some are also pushing Ms Reeves to change the 45p top rate of income tax for those earning more than £125,000.