Chancellor Sajid Javid faces a revolt by London MPs after plans emerged to hit big homes with a “mansion tax” and target high earners by slashing tax relief on pension savings.
MPs said they would impact heavily on London, where higher property values and incomes are seen as a sitting duck for the Exchequer to raise money for spending plans championed by the Prime Minister.
The Conservatives opposed an annual property tax on high-value homes when it was proposed by Labour, saying that it would unfairly penalise Londoners who have no choice but to pay through the nose for their housing.
Former Westminster council leader Nickie Aiken, now Conservative MP for Cities of London and Westminster, told BBC radio: “I was anti the mansion tax and I shall remain anti the mansion tax.”
A Tory MP active on the London Group of backbenchers said: “Any form of mansion tax would be damaging for London and would be resisted.
They are probably looking at an extra, higher council tax band, however.”
Another London Tory MP said a higher council tax band would require a revaluation of all council tax bands and properties, a mammoth exercise that has been ducked for years.
“The long-delayed revaluation could be problematic,” said the MP.
“The issue of tax relief on pensions has also been raised before. This is unlikely because we already have a problem in the NHS with doctors retiring early.”
Pension tax relief could be a simpler, but equally controversial, target for the Chancellor than a mansion tax.
At present people are not taxed on income they put aside for their retirement, meaning that higher rate taxpayers get 40 per cent relief on every pound they save and basic rate taxpayers get 20 per cent relief.
Solihull Conservative MP Julian Knight said the Chancellor should give basic rate taxpayers a bigger incentive to save for retirement rather than simply penalising the better-off.
Tom McPhail, head of policy at investment firm Hargreaves Lansdown, said scrapping high-rate pension tax relief “would be an act of fiscal hooliganism”.
A Treasury spokesman said: “While we keep all aspects of the tax system under review, we do not speculate ahead of the Budget.”
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