State pensioners with a total household income exceeding £35,000 will not be eligible to delay payment of the Labour government's proposed 'mansion tax'. This shake-up introduces four new council tax bands, potentially pushing annual bills for homeowners up to £7,500.
New Council Tax Bands and Impact
The sliding scale targets properties valued at £2 million and above. Under the plan from Chancellor Rachel Reeves, homeowners could defer payment until they die or sell their home, but only if their household income falls below £35,000. However, Department for Work and Pensions (DWP) data shows the average retirement income for couples is £35,400, excluding them from any relief.
Sir Steve Webb, former pensions minister and now a consultant at LCP, warned that as many as two-thirds of those affected could be forced to pay immediately. He stated: 'Around 450,000 of the 1.1 million highest value properties in England, namely those in council tax bands G and H, are occupied by pensioners. Not all of them would face the charge, but many will. Of those that do, around a third could potentially defer it on the basis of having an income below the £35,000 cut-off. However, the remaining two thirds will have more money coming in and would have to start paying the charge if the current proposals become law.'
Reactions from Age UK and Treasury
Debbie Abrahams from Age UK commented: 'Age UK understands the rationale for a so-called 'mansion tax' and we do not oppose it, but we are keen to ensure that older people who are 'asset-rich and income-poor' are not expected to pay sums that they simply cannot afford during their lifetimes. We believe that any older person whose home is liable for the 'mansion tax' should have the right to defer paying it until after their death, with the money due being taken from their estate.'
A Treasury spokesman defended the policy: 'We want to provide options to people in more difficult circumstances, for example those who may struggle to pay or who meet certain disability criteria – that is what our consultation set out. We are addressing a longstanding unfairness in our country, where a Band D home in Darlington or Blackpool pays more in council tax than a £10m mansion in Mayfair.'
