Labour's Mansion Tax is the Right Idea — Done the Wrong Way

Reading's Liberal Democrats have welcomed the principle behind the Government's new High Value Council Tax Surcharge — but condemned Labour for designing it in a way that leaves Councils like Reading Borough Council doing all the work. At the same time, the Treasury takes all the money.

The Government's High Value Council Tax Surcharge — widely referred to as a "mansion tax" — will apply from April 2028 to residential properties in England worth £2 million or more. The annual charge will range from £2,500 to £7,500 depending on property value, and is expected to raise around £430 million a year.

But in a move criticised across local government, the revenue will flow directly to the Treasury — not to local Councils. Reading Borough Council will be responsible for identifying eligible properties, issuing bills, and chasing payments, yet will see none of the proceeds. The Government says Councils will be "fully compensated" for their administrative costs — but no further funding will flow to the town hall.

The Liberal Democrats have long championed fairer property taxation. The concept of a high-value property levy was first proposed by the party's former leader Vince Cable in 2009, and featured in the Liberal Democrats' 2010 General Election manifesto. Liberal Democrat MPs have already raised the issue in Parliament, questioning why Whitehall should retain revenue collected by Councils.

"We've argued for fairer property taxation for years — and we stand by that principle. The current system, where a £10 million mansion in Mayfair can pay less in Council tax than a family home in Reading, is indefensible. But Labour have taken our idea and implemented it in the most centralising way possible. Reading Borough Council will administer this tax, deal with the queries and appeals, and then watch £430 million a year disappear to the Treasury.

At a time when this Council is raising car parking charges, residents are losing bus services, and local services are being squeezed from every direction — it is simply wrong for the Government to use the Council tax system to extract revenue and then keep it for themselves.

We are calling on the Government to think again. Revenue raised through the Council tax system should stay in local communities — not be siphoned off to the Treasury."

Councillor Meri O’Connell, Reading Liberal Democrats

The Reading Liberal Democrats are urging residents and local organisations to respond to the Government's consultation on the surcharge, which closes on 14 July 2026, and to push for the revenue to be retained locally. The consultation can be found at: www.gov.uk/government/consultations/high-value-Council-tax-surcharge/high-value-Council-tax-surcharge