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Rachel Reeves’ controversial mansion tax could leave up to 50,000 households struggling to pay their bill, forecasts show. When the Chancellor’s tax comes into force in April 2028 it is expected to apply to about 165,000 properties, with tens of thousands of owners finding it hard to pay from their yearly income, Office for Budget Responsibility (OBR) forecasting suggests.

It also estimates that thousands of owners could be trapped in an appeals system. The OBR suggested 20% of property owners may appeal against their valuation and 40% would be successful.

The annual surcharge applies to residential property in England valued at more than £2million in 2026. Valuations are to be provided by the Government’s Valuation Office Agency.

Payments fall into four bands and will be collected along with Council Tax, but the money will go directly to the Treasury, not local authorities.

Properties valued from £2m to £2.5m will pay £2,500 and those valued from £2.5m to £3.5m will pay £3,500.

For properties valued from £3.5m to £5m owners will pay £5,000 while properties valued at more than £5m will pay £7,500.

The tax was announced as part of a package of tax rises unveiled by the Chancellor to meet her self-imposed fiscal rules.

Ms Reeves told the Commons her High-Value Council Tax Surcharge would also address wealth inequality in Britain and apply to 1% of properties.

Shadow Chancellor Sir Mel Stride told the Mail that what the OBR analysis shows is Labour’s new tax on homes will distort the housing market.

He said: “Fewer houses built, homes selling for less to avoid huge tax bills, and more bureaucracy and uncertainty for home owners.”

Experts at the Institute of Fiscal Studies have said previously that the “mansion tax” plan doesn’t go far enough and called for a complete revaluation of council tax bands.