A Conservative peer and party treasurer has suggested the Government should raise taxes on the 200,000 most expensive homes in England.
Lord Leigh, a senior party treasurer, said mansions, penthouses and other luxury properties should be subject to higher council taxes.
Speaking at a meeting on tax at the Conservative Party’s annual conference in Manchester, Lord Leigh said the Government should introduce new council tax bands and charge them higher rates.
The peer, who is a chartered accountant and co-founded Cavendish Corporate Finance, said the Government should “revalue properties in Band H, of which there are 200,000 in England and about 5,600 in Wales.”
“We should revalue those and add new higher bands so we have H, I, J, K. And then all sorts of revenue would come in from those properties.”
There are currently eight council tax bands, A-H, with those in Band H paying the highest rates. The amounts paid depend on the local authority in which a property is sited.
Britain’s most expensive council tax is £4,843 a year for Band H properties in Rutland, followed by Nottingham (£4,823), Lewes in East Sussex (£4,776) and Dorset (£4,776).
Lord Leigh’s suggestion that properties in the top band should be revalued stems from the fact that council tax bandings are still based on the value of properties in 1991.
As a result, levies do not always reflect the way houses in some areas and some types of property have surged in value since then, especially in the south-east.
A property must have been worth £320,001 or more in 1991 to qualify for Band H tax. Example rates provided by Lambeth Council show a house in the borough would have to be worth £3.5m to qualify for the highest rate of council tax.
However, disparities across the country mean that Band H can now contain homes worth up to the £250m sought for The Holme, in Regents Park, which is thought to be the UK’s most expensive home.
Since the Holme is in Westminster, which has one of the UK’s lowest council tax rates, its owners will only have to pay £3,849 – far less than a Band H home in Rutland.
The Institute of Fiscal Studies has previously said the council tax system is “out of date and arbitrary, and highly regressive”.
Lord Leigh, a chartered accountant and member of the Lords finance bill sub-committee, has previously called for changes in council tax banding in speeches in parliament.
His suggestion has echoes of the “mansion tax” proposed by former Labour leader Ed Miliband in 2014.
Then, Mr Miliband proposed a supertax on homes valued at more than £3m. The idea sparked a backlash, including from prominent Labour backbenchers, and was dropped after the party lost the 2015 election.
Lord Leigh’s suggestions are likely to prove controversial within his own party. Rishi Sunak has been under intense pressure to cut taxes before the next election and has said he has a long term ambition to lower the burden on families.
The Conservative Party said in its 2019 manifesto it was “proud that Conservative councils have led the way in helping keep council taxes low”. The Conservative Party was approached for comment.