Healey Plans Council Tax Hikes and Lower Mansion Tax Threshold for Expensive Homes UK considers higher council tax bands and a lower mansion tax threshold, affecting owners of expensive homes as the government reviews outdated property valuations. Owners of expensive homes face a double financial hit as Chancellor John Healey considers introducing higher council tax bands while also lowering the threshold for the mansion tax. Healey has conceded the Government is evolving its stance on council tax and warned of possible changes for those who have extremely valuable properties. Targeting council tax, which brings in £47 billion a year, is seen as a fairly easy way to raise more revenue. The Treasury's Valuation Office Agency is reviewing homes in the highest F, G and H bands to pinpoint those that will be subject to the mansion tax. The current council tax valuations were set in 1991. Since then, the average London house price has jumped by 500 per cent. As a result, flats and houses in the capital that are today worth millions may face relatively modest council tax bills compared to properties in economically depressed areas where house prices have not risen by nearly as much. A report issued on Friday by the Resolution Foundation think-tank claimed the capital underpaid £3.1 billion in council tax in 2024-25 as a result of low council tax rates in the city. The think-tank argues that if homes elsewhere were taxed at London rates, households would enjoy the equivalent of a £12.3 billion tax cut.For instance, the council tax on a band H property, the most expensive category, in the west London borough of Hammersmith and Fulham is £3,039 a year. This is less than the £3,072 annual bill on a far less expensive band E property in Blackpool. At present, the council tax on a band H property is charged at twice that of a band D home.Talk of council tax reform comes amid reports that Healey is also looking to cut the threshold for the mansion tax from £2 million to £1.5 million. That would double the number of homes liable for the levy from 135,000 to 272,000, according to calculations by Hamptons. However, nine out of the ten areas that would be hardest hit are in London constituencies held by Labour MPs. The estate agent estimates 10,000 fewer homes will be hit by mansion tax since the levy was unveiled in last year's Budget because of the gloom it has spread to the property market in affluent areas, where house prices are falling.Revenues from the mansion tax, which takes effect in April 2028 and is officially known as the High Value Council Tax Surcharge, go into central government coffers. Healey could also raise the amount of tax payable on different bands of mansion tax, which currently range from £2,500 a year on a property valued at £2 million to £2.5 million to £7,000 a year on a home priced at £5 million or more. These charges will be up-rated every five years in line with the Consumer Prices Index.Robert Salter, a partner at accountancy firm Blick Rothenberg, says this is inequitable. He argues that introducing higher bills for band H homes would raise billions for cash-strapped local authorities. More cash could be extracted if band G homes were also compelled to pay more council tax, as this category includes roughly eight times as many homes as band H, said the think-tank Tax Policy Associates.The Budget is coming on October 28, when Andy Burnham's government will set out its plans. Experts recommend taking steps to protect finances now. With council tax reform and mansion tax adjustments on the horizon, owners of expensive properties should stay informed and plan ahead.