Balls confirms how much mansion tax would cost rich homeowners

Senior Labour figures have raised fears about the tax plans in recent weeks with Margaret Hodge, chairman of the powerful public accounts committee, warning it was “too crude to work properly” and former Labour cabinet minister Dame Tessa Jowell admitting she was “concerned” about the impact it could have on families whose homes have increased in value but their incomes are low.

Mr Balls insisted that “modest properties” would not be caught up in the tax and underlined how the threshold for paying the charge would rise in line with house prices, rather than inflation, so the number of homes affected did not increase.

In an article for the Evening Standard, he said the tax would be progressive, with owners of properties worth more than £10m expected to pay substantially more than those at the lower end of the scale. Home owners with incomes on basic rate tax, under £42,000 a year, would be allowed to defer the charge.

Mr Balls also reiterated that Labour is looking at targeting overseas owners of second homes in Britain in its plans to raise extra cash to plough into the National Health Service. He wrote: “First, we will guarantee that more modest properties are not brought into the scope of the tax.

“The Tories have been spreading desperate smears that properties worth far less today – even £1m – will end up paying. This is simply untrue.”