The UK government plans to monitor home improvements to determine eligibility for the mansion tax, which will apply to properties worth over £2 million. According to the source, the Valuation Office will record chhanges to properties, such as extensions and renovations, to assess whether they meet the tax threshold. This move has been criticized by the Conservatives as a 'tax on aspiration'.

£2 Million Threshold and Tax Bands

The mansion tax, announced by Rachel Reeves,will have four tax bands: £2,500 per year for homes worth £2-2.5 million, £3,500 for homes valued at £2.5-3.5 million, £5,000 for properties worth £3.5-5 million, and £7,500 for properties over £5 million. as the report says, the Office for Budget Responsibility (OBR) has warned that these 'narrow' bands may distort the property market and lead to 'bunching' of property prices below the thresholds.

Recording Home Improvements and Appeals System

The Valuation Office will record changes to properties, including extensions and renovations, to monitor whether they hit the tax threshold. Taxpayers will have the right to challenge any new assessment, but critics argue that this will lead to a bureaucratic appeals system.. According to the source, the OBR estimates that up to 50,000 households could struggle to pay the charge, and around 5,300 families may be forced to sell their homes and move to a cheaper area.

Deferred Annual Payment and 'Pay as You Die' Policy

Ministers have proposed allowing people to defer the annual payment if they have an income of less than £35,000 or savings below £16,000.. However, the amount would be clawed back from their estate after their death, on top of any inheritance tax due. This 'pay as you die' policy has been criticized by Tory frontbencher Gareth Bacon, who said it is a 'double whammy' on top of inheritance tax.