Rachel Reeves will announce a tax surcharge on more than 100,000 high-value properties in this week’s Budget, according to reports.
The Chancellor will hit homeowners with properties worth more than £2million with a levy that could raise £400-£450 million, says The Times.
People will be able to defer the cost until they die or move house to avoid forcing them to sell up, according to the newspaper.
The move would hit tens of thousands of homeowners in London and has sparked fears it would trigger another wave of departures of high-earners from the capital.
Ms Reeves is grappling with weak economic growth, persistent inflation and an expected downgrade to official productivity forecasts as she prepares her statement on Wednesday.
After scrapping plans to raise income tax, she is expected to look to a "smorgasbord" of smaller measures to bridge a multi-billion pound gap in her spending plans.
She is thought to be considering bringing in a pay-per-mile tax for electric vehicle drivers and limiting how much workers can stash in their pensions under salary sacrifice schemes before paying national insurance.
And she will reaffirm the Government's commitment to the triple lock on state pensions, and confirm that 13 million pensioners are set to benefit from an above inflation rise next April.
An extension of the freeze on income tax thresholds is also among rumoured measures and would see more people dragged into paying tax for the first time or shifted into a higher rate as their wages go up.
Ms Reeves will also extend a crackdown on benefit fraud in a bid to raise £1.2 billion as she seeks to balance the books in the Budget.
She is expected to scrap the two-child benefit cap, in a move that could cost more than £3 billion.
She will extending targeted case reviews, which root out inaccuracies in universal credit claims, with the aim of bringing in an extra £1.2 billion by March 2031.
Shadow chancellor Sir Mel Stride said Ms Reeves and Labour were choosing to increase the country's welfare bill and passing the cost on to workers.
Writing in The Daily Telegraph, Sir Mel said: "Britain is in the grip of a cost-of-living crisis. People work harder, plan ahead and make tough choices daily.
"In such times, politicians owe them honesty not reckless promises or unfunded spending. Yet that is exactly what Labour looks set to deliver at the Budget: a multibillion-pound welfare splurge funded by stealth taxes on people who are already struggling.
"Central to that splurge is the expected scrapping of the two-child benefit cap. However, it is not only responsible - it is fair.
"Remarkably, the Conservatives are the only party who have come to that conclusion. Every other party is committed to scrap the cap - it's only the Conservatives who want to control welfare spending.
"It is now clear that Labour will raise taxes to pay for this welfare expansion - possibly by extending the freeze on income tax and National Insurance thresholds.
"So, when taxes go up this week - when your pay packet shrinks - remember this is not because of global forces, or Brexit, or the Conservatives but because Labour has chosen higher welfare and is sending the bill to you."
The Lib Dems have said the move would be "rank hypocrisy" and amount to a "stealth tax stitch-up" by Labour and the Conservatives.
They say extending it for two years will drag another 1.3 million into starting to pay income tax or into the higher rate, on top of 7.7 million already estimated to be hit under the Conservative freeze due to end in 2028.
Lib Dem deputy leader Daisy Cooper said: "A staggering nine million people are now set to be hit by the Conservative-Labour stealth tax stitch-up."
She added: "Families across the country are fed up with being milked for their hard-earned cash."
Helen Miller, director of the influential think tank the Institute for Fiscal Studies, said freezing the income tax threshold would "break the letter" of Labour's manifesto.
"Assuming that it's done the same way that it's been done so far, it will also be a freeze in national insurance thresholds.
"It will therefore also be an increase in national insurance, and if so, in my mind, it would also break the letter of the manifesto, which said no increase in national insurance," she told The Westminster Hour on BBC Radio 4.
Reacting to the news of the likely property tax announcement, Christian Lock-Necrews, of Winkworth's Knightsbridge and Chelsea office, said: “I have a client from the Middle East, who said that if this 100% increase does come in, it will likely be the lever to sell their property as it’s just one thing after the other at present.
“They have been generational owners who keep this as a holiday home, but will decide to sell it.”
