Could you be dragged into paying ‘mansion tax’ as Burnham moots lower threshold?
Andy Burnham, the MP tipped to be the next prime minister, could reportedly lower the ‘mansion tax’ threshold from £2 million to £1.5 million to drum up more cash for the Treasury - what does it mean for property owners?
Tens of thousands more households could be dragged into paying the ‘mansion tax’ under rumoured plans, if Burnham becomes the new Labour leader.
The prime minister-in-waiting could potentially lower the threshold at which people start to pay the High Value Council Tax Surcharge from £2 million to £1.5 million, according to reports in The Mail on Sunday.
An estimated 150,000 additional households could be dragged into paying the surcharge if the levy was brought down to the reduced amount, based on calculations done by think tank Tax Policy Associates.
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The so-called mansion tax was first announced by chancellor Rachel Reeves during her 2025 Autumn Budget and is set to come into force in April 2028.
As it stands, the measure will see those with properties worth over £2 million pay between £2,500 and £7,500 per year depending on the value of their home. It is expected to bring in £430 million in 2029/30.
But should Burnham win a Labour leadership contest, he will need to find ways to fund an ever-growing welfare budget and multi-billion pound hole in the Defence Investment Plan (DIP).
Lowering the entry level at which households pay the mansion tax could be one way of doing this alongside potentially scrapping the triple lock pension system.
MoneyWeek approached Andy Burnham’s office to comment.
What is the mansion tax and how will it work?
The High Value Council Tax Surcharge will take effect from April 2028 and apply to homes in England worth £2 million or more.
The Valuation Office (VO), which is part of HMRC, is set to carry out a valuing exercise to assess which homes the surcharge will apply to.
Homes valued at £2 million or more but less than £2.5 million will be charged £2,500.
Properties worth £2.5 million or more, but less than £3.5 million will need to pay £3,500. Homes worth between £3.5 million and £5 million will need to pay £5,000. Properties worth £5 million or more face a £7,500 surcharge.
These charges are set to be increased each year in line with the Consumer Price Index (CPI) measure of inflation. Revaluations will be conducted by the VO every five years.
How a reduced threshold of £1.5 million on the levy would be applied exactly is unclear, but would almost double the amount of households paying it, according to calculations done by Tax Policy Associates.
The think tank predicts around 243,000 households would have to pay at least something, up from 127,000 under a £2 million entry-level threshold.
What else is Andy Burnham considering?
In a major speech on 29 June, Burnham said he intended to reform business rates to support high streets and pubs which have taken a battering in recent years.
According to the British Beer and Pub Association, a trade body for the sector, 161 pubs closed across Britain in just the first three months of 2026. UK Hospitality, a trade body for the hospitality sector, has forecast six hospitality venues will close each day in 2026.
Rumours have been swirling about what else Burnham could introduce if he were to become the next prime minister of the UK.
The MP for Makerfield could reportedly look at reforming Capital Gains Tax (CGT) by bringing the rate paid in line with income tax. Basic-rate taxpayers currently pay a CGT rate of 18% while higher and additional-rate taxpayers pay 24%.
Burnham could also replace stamp duty with a ‘land value tax’ – an annual tax based solely on the value of the land itself.
