The move would be one of the “fairer” and “least disruptive” options, analysts have said.
Rachel Reeves plotting tax hike on thousands of households with new band (Image: Getty)
Thousands of homeowners across England could face higher council tax bills as the Treasury considers plans to create new bands for more expensive properties. The proposal, being explored ahead of the Autumn Budget, is part of Chancellor Rachel Reeves’s wider effort to raise revenue without breaking Labour’s pledge not to revalue every home this Parliament.
Officials are understood to be considering introducing additional bands at the top end of the scale rather than a wholesale review of all property values, the Mail on Sunday reports. The change would allow the Treasury to boost receipts from pricier homes, with properties in London and the South East expected to be the prime targets.
Council tax banding in England has not been revalued since 1991 when it was introduced. (Image: Getty)
David Fell, lead analyst at estate agency Hamptons, said a selective approach may prove politically and practically appealing. He told the Mail: “Adding a higher council tax band would probably be one of the fairer and least disruptive property tax reform ideas we’ve seen floated so far.”
Council tax payments depend on the property’s band, which is determined by the value of the home as of April 1, 1991, and these bands range from A to H. Council tax banding has never been revalued in England.
The highest current bracket, Band H, applies to homes then valued above £320,001 in 1991. According to Nationwide’s house price index, a property with that worth would be valued at around £1.6million in 2025. In London, the value would leap to around £2.1million.
Wales introduced an additional top band in 2005 for properties exceeding £424,000 in its 2003 valuations.
It comes following recent calls to reform council tax banding, with the current system deemed unfair. The Institute for Fiscal Studies (IFS), a think tank, argued the current system is “out-dated” and must be revised based on house prices today.
At present, the London Borough of Wandsworth pays the least amount of council tax in the UK, with average band D households paying around £998 per year. This comes despite Rightmove data showing house prices in this borough average around £756,091.
Meanwhile, Rutland, in the East Midlands, pays some of the highest rates for council tax, with average band D households paying around £2,671 per year. According to Rightmove, house prices in this constituency average around £434,694.
Labour ruled out changing council tax bands in England during its election campaign last summer, with Ms Reeves stating the party did “not want to see the tax burden on working people increase”.
However, Wales has already announced plans to carry out a reevaluation of property prices in 2028.
Introducing a new council tax band for higher-value properties would align with Ms Reeves’s recent remarks that those with “broad shoulders” should contribute more as she searches for ways to strengthen the public finances and stimulate growth.
A Treasury spokesman said: “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.”
