New council tax bands could affect tens of thousands of homeowners under new rates which target high-value homes.
The main targets of the rumoured proposals are said to be affluent Londoners and those living in the South East.
The proposal is part of Chancellor Rachel Reeves’ ongoing attempt to balance the £42 billion deficit, the Mail on Sunday reported.
It would help Ms Reeves’ efforts to avoid breaking Housing Secretary Steve Reed’s promise not to revalue homes for council tax gains this Parliament.
New bands would provide a cash boost for local authorities, lowering the need for them to plead with the Treasury for grants.
The highest level of council tax in England, Band H, concerns properties which were valued at £320,001 or more in 1991 - during the last valuation.
Properties valued at £424,000 in 1991 are estimated to be worth around £2.1 million today, according to Nationwide.
But in the capital, this figure looks to be closer to £3 million in 2025 under the latest boom in housing prices.
The key boroughs targeted by tax band reforms are the luxurious London borough of Kensington and Chelsea, which boasts an average house price of £1.8 million on Rightmove.
Reeves wouldn’t be the first to deliver such a policy - in 2005, Wales added a council tax band to cover properties valued at £424,000 or more in 2003.
This comes after comments from the Chancellor last week that squeezing those with “broad shoulders” would be a “part of the Budget story.”
The policy has been criticised by those who fear that council tax hikes will further stunt the struggling property market. Even in central London, sales of properties worth £5 million or more were down by 40 per cent last year.
A spokesperson for the Treasury told the Mail: “The Budget will strike the right balance between making sure that we have enough money to fund our public services while ensuring we can bring growth to boost living standards.”
