Thousands of flat owners could be hit with £6,000 bills under Rachel Reeves's mansion tax

The levy is expected to target homes valued at £1.5million or above, with affected property owners potentially seeing their annual council tax bills exceed £6,000.

Estate agency Hamptons conducted research examining the nation's 300,000 most expensive properties based on recent sale prices, discovering that nearly one-third are apartments rather than the mansions typically associated with such measures.

Government insiders indicate the scheme would generate approximately £600million annually for the Treasury.

The affected flats include both luxury apartments in modern towers equipped with concierges, gyms and swimming pools, as well as three or four-bedroom properties within converted townhouses and period buildings.

These properties are predominantly located in London's most expensive boroughs, particularly Kensington and Chelsea, Westminster and Camden.

Tom Bill, head of UK residential research at Knight Frank, observed: "The Treasury will be delighted that the term 'mansion tax' has caught on among Labour backbenchers, but it's unlikely to reflect the reality on the ground for many homes."

David Fell, lead analyst at Hamptons, noted that many of these flats were converted in recent years. He stated: "Where these flats were bought in the last decade, in many cases, these are homes that are no longer worth what their owners originally paid for them."

The proposed surcharge would apply to properties in council tax bands F, G and H, with officials planning to revalue 2.4 million homes currently in these categories.

England's council tax system still relies on property valuations from April 1991, when band F properties were worth between £120,000 and £160,000, band G between £160,001 and £320,000, and band H above £320,001.

According to Hamptons' analysis, the levy would begin affecting properties that have sold for £1.5million or more. The estate agency estimates the additional charge would average approximately £2,000 annually per property.

Current council tax bills for band H properties average £4,602 in the 2025-26 financial year, meaning the surcharge could push total annual bills beyond £6,000 for owners of the most expensive homes.

Hamptons' research indicates that more than 90 per cent of the 300,000 properties likely to face the surcharge are located in London and the South East.

For houses specifically, the London boroughs of Wandsworth, Richmond and Barnet would be particularly affected by the new measures.

Tom Bill raised concerns about the proposal's fairness, noting: "There is also a question around band D and E properties being exempt but potentially worth more than those captured in the top three bands."

He added: "The other issue is that more expensive properties are not easy to value as they tend to be less standardised. Overall it feels like the sort of policy that could get bogged down in litigation."

Sir Mel Stride, the shadow chancellor, condemned the proposed surcharge as "a class war against Middle England".

He stated: "If Starmer and Reeves decide to introduce a new tax raid on flats and family homes, they will be punishing aspiration and hitting hard-working people."

Sir Mel argued: "Instead of raising taxes again, Rachel Reeves needs to get a grip on spending, including the welfare bill. It's time Labour rewarded work, not those on welfare."

The Chancellor is reportedly considering allowing homeowners to defer payment until they sell their property or pass away, addressing concerns about asset-rich but cash-poor pensioners.

However, this would create an additional inheritance tax burden for families alongside the existing 40 per cent death duty.

A Treasury spokesman stated: "We do not comment on tax speculation outside of fiscal events."