The Labour government’s proposal to impose a mansion tax on homes valued over £2 million has drawn sharp criticism from a leading Bath councillor tasked with managing the local council’s finances.
Under the planned “high value council tax surcharge,” property owners of homes worth more than £2 million could face annual charges ranging from £2,500 to £7,500. This surcharge, collected alongside council tax, will go directly to the central government rather than local councils.
Mark Elliott, the Bath and North East Somerset Council’s cabinet member for resources, representing Lansdown for the Liberal Democrats, expressed his concerns to the Local Democracy Reporting Service. “It’s still unclear how this so-called ‘mansion tax’ will impact our residents. Like other councils, we await detailed guidance from the government,” he said.
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Elliott described the tax as “less a council tax increase and more a workaround to boost central government revenues while superficially adhering to Labour’s tax commitments.” He added, “This tax appears to target owners—not residents—of properties with an updated value exceeding £2 million. The additional funds would be diverted to cover central government spending gaps, which seems fundamentally unfair.”
He stressed that local taxpayers rightfully expect their council tax to support essential local services such as road maintenance, waste collection, and critical social care that many vulnerable residents depend on. “While there is broad agreement that council tax reform is necessary, this does not constitute genuine reform. It’s more of a short-term patch for unrealistic government tax promises.”
Council tax in England remains based on 1991 property valuations, a system long criticized for its outdated basis and lack of linkage to residents’ ability to pay. Despite this, council tax remains a vital revenue source for local authorities amid reductions in government funding.
Recently, Bath and North East Somerset Council has increased its council tax by the maximum 4.99% permitted without triggering a local referendum due to escalating social care costs. Currently, a Band H property in Bath pays £4,429.08 annually after all precepts.
The government estimates that fewer than 1% of homes in England will be subject to the new surcharge. Bath’s Georgian townhouses, often exceeding £2 million in value, are among those potentially affected. For example, a home on the iconic Circus is listed at £3.9 million.
Unlike traditional council tax, this surcharge will be billed to property owners rather than occupants. The tax is projected to generate around £430 million annually for the government. Local authorities will receive compensation for the added administrative costs of collecting the tax.
The government aims to implement the mansion tax by April 2028, with a public consultation on detailed regulations planned for next year.