More than 12,000 households will be wrongly hit with 'mansion tax' demands for thousands of pounds, officials admit

More than 12,000 households will be wrongly hit by Labour's 'mansion tax', official documents suggest.Forecasts by the Office for Budget Responsibility (OBR) show that one in five of the 156,000 households who are set to be hit by the levy will appeal against their assessments.It is also estimated that four in 10 of those challenges will be successful, meaning that 12,480 households will succeed despite initially being told they will have to pay up.What is officially called the High Value Council Tax Surcharge will take effect from April 2028 and apply to properties valued at more than £2million. The surcharge will be introduced in four price bands, starting at £2,500 annually for properties worth more than £2million, rising to £7,500 for those exceeding £5million.Property experts are predicting furious rows between householders and tax officials if their homes are judged to be just over those thresholds.Households in London and the South East are set to be hardest hit by the new levy - announced by former Chancellor Rachel Reeves last year - as this is where property prices are the highest. A re-evaluation of more expensive homes will determine those that are liable for the tax, which is set to impact properties across council tax bands F, G, and H. Households in London and the South East are set to be hardest hit by the new levy - announced by former Chancellor Rachel Reeves last year - as this is where property prices are the highestIt is being carried out by the Valuation Office Agency (VOA), part of HMRC, who have previously said they will likely be checking the value of homes that currently have an 'indicative value' of £1.5million and upwards.Guidance issued to VOA staff, dubbed a 'snoopers' handbook', has outlined how tax inspectors will approach enforcing the new levy.It states that households who refuse to allow inspectors through their front door can still have their properties photographed from the street.This is even if a householder has withheld or withdrawn consent for an inspection. And those who refuse permission also face an 'escalation' of their case to more senior HMRC staff.Households who try to delay or obstruct inspectors wanting to check if they are liable for the levy can be fined up to £500.A supplementary forecast published by the OBR revealed how 31,200 households are expected to appeal against being hit by the tax.It states: 'This costing includes provisional assumptions on an appeals process similar to the current council tax and business rates process, which is assumed to be utilised by taxpayers at the lower end of each band.'The appeal rate may vary across bands due to differing band widths, so 20 per cent is considered a central estimate for a provisional modelling assumption.'The success rate of these appeals is provisionally assumed to be 40 per cent due to narrow bands and higher-value properties than for council tax.'The same document reveals that 16 per cent of households will have to sell up because they won't be able to afford the levy through either income or financial assets.Separate analysis by Together, the specialist lender, found that a quarter of owners would consider selling if they were subject to the tax.Scott Clay, the company's director of private clients, told The Times: 'These forecasts highlight just how difficult it will be to apply a fixed tax threshold fairly across a changing property market.'Our research suggests that, if London prices continue to fall at their current rate, about one in eight homes initially caught by the tax could be worth less than £2 million by the time the first bills arrive in 2028.'With valuations then fixed until 2033, homeowners could face years of charges based on an outdated assessment. 'The fact that officials expect more than 12,000 appeals to succeed underlines the risk of people being billed incorrectly from the outset.'This will be particularly concerning for homeowners who are asset-rich but cash-poor.'The Treasury's own assumption that some may have to sell because they cannot afford the charge shows this is not simply a tax on readily available wealth.' A Government spokesperson said: 'At the moment, a band D home in Darlington can pay more council tax than a £10m mansion in Mayfair.'This surcharge addresses that longstanding unfairness and will affect less than 1 per cent of properties in England. We expect the vast majority of properties to be placed in the correct band.'The Valuation Office has extensive experience valuing homes and will use the best available evidence to make accurate banding decisions.'