UK budget introduces mansion tax on homes worth £2 million

UK Chancellor Rachel Reeves today announced a tax on properties worth more than £2 million in a budget which was accidentally leaked shortly before she rose to speak.

The so-called "mansion tax" is expected to raise £400 million in 2029-30, according to the Office for Budget Responsibility which blamed a “technical error” for accidentally releasing the details early.

The OBR’s report, which is usually released after a chancellor has delivered their budget statement to MPs in the House of Commons, included growth forecasts and the extent of tax rises. It said the UK economy will grow more slowly over the next four years than had been predicted.

It also confirmed that Ms Reeves’s budget “raises taxes by amounts rising to £26 billion in 2029-30, through freezing personal tax thresholds and a host of smaller measures”.

Other personal tax changes include £4.7 billion through charging National Insurance on salary-sacrificed pension contributions, and £2.1 billion through increasing tax rates on dividends, property and savings income by two percentage points.

What’s in the budget? Freeze in income tax thresholds results in 780,000 more basic-rate, 920,000 more higher-rate and 4,000 more additional rate payers

National Insurance charged on salary-sacrificed pension contributions above annual £2,000 threshold

Rates on property, savings and dividend income to rise by 2 percentage points

Electric cars hit with 3p per mile tax from April 2028

Two-child benefit cap is removed, costing £3bn

5p cut in fuel duty is retained until September 2026

Debt to rise from 95 per cent of GDP to 96.1 per cent by the end of the decade

The annual property levy, which is most likely to affect homeowners in London where prices are highest, comes on top of council tax and would cost £2,500 for a home valued at £2 million to £2.5 million, rising to £7,500 for a property worth above £5 million.

Nigel Green, chief executive of i