Britain already has the highest property taxes in the world – but it’s about to get worse

But the tax burden on our homes is about to get even worse.

In a little over 18 months’ time, homes worth more than £2m will pay up to £7,500 a year on top of council tax under the “high value council tax surcharge” – better known as the “mansion tax” – even though it will catch some fairly ordinary terraced houses in parts of London.

The levy is already distorting the property market, with sellers agreeing deals below the £2m mark, according to estate agents Hamptons.

It seems likely the threshold will be frozen, so growing numbers of properties will fall into the tax net over time. A future government might even lower the threshold down from £2m to raise more cash.

But there is something else on the horizon threatening to drive up homeowners’ tax bills: a change in Labour leadership.

With the Prime Minister under pressure to resign, potential challengers have been putting forward their vision for Britain – which include changes to wealth taxation.

The thin end of the wedge

As house prices have grown, so has the complexity of property taxation in Britain. Tom Bill, of estate agents Knight Frank, said: “If you designed the system from scratch, you wouldn’t do it as it’s evolved today.”

One of the most damaging taxes has been stamp duty. Over the years, successive stamp duty changes have added thousands to the cost of moving home. The average buyer in England now pays £5,500 in stamp duty, up from around £1,700 in 2010, according to analysis by Hamptons.