Healey backs down on 'mansion tax' expansion after Labour MPs warn of London family home hit

Chancellor John Healey has rejected proposals to lower the mansion tax threshold from £2 million to £1.5 million, after Labour MPs warned the move would hammer ordinary families in the capital. Healey reportedly fears that rewriting the rules before the tax even starts in April 2028 would erode public support for the reform. He now faces a squeeze to plug a growing Budget black hole, with soaring Iran war borrowing costs wiping billions off public finances ahead of his October 28 Budget.

Labour MPs hold fifteen of the 20 constituencies most exposed to the existing £2 million threshold, among them Kensington & Chelsea.

Separately, Healey is reportedly eyeing a £1 billion business rates increase on London offices in the Square Mile and Canary Wharf, which industry chiefs are calling 'an attack on growth policy'.

Tory leader Kemi Badenoch has already vowed to scrap mansion tax entirely and abolish death duties on family homes, putting home ownership at the heart of the Conservative pitch.