Lib Dems £2m mansion tax

The Liberal Democrats have made changes to their controversial plans to introduce a tax on mansions, or properties worth over £1 million. Revised plans include doubling the rate from 0.5% to 1% and raising the barrier from £1 million properties to those valued at over £2 million.

Critics are describing it as a damage limitation exercise.

Economics spokesman Vince Cable caused uproar, not least among colleagues he failed to consult properly, when he announced the 0.5% levy on all £1 million-plus homes in September.

Party leader Nick Clegg responded by saying the value threshold would be raised to £2 million-plus – taking up to 180,000 homes out of the equation. The remaining 70-80,000 properties will be left with a 1% annual levy on the value, which is calculated to increase the income from the measure by nearly half to £1.7 billion.

According to party figures, the average price of all the properties which would now face the bill for the income tax cuts is £4.4 million.

Under the plans, to be detailed at a London event, the property levy would help pay to take around four million low-paid workers and pensioners out of paying income tax altogether by raising the income tax threshold to £10,000 – also meaning a £700 cut for most workers.