Balls said that the threshold for the mansion tax – which is intended to help fund the NHS with an extra £2.5bn – will start at £2m, rubbishing claims that houses worth £1m would be affected.
Writing in London's Evening Standard, he said, “Rather than raising it in line with overall inflation, we will do so in line with the average rise in prices of high-value properties over £2m,” he said.
“This will ensure that the number of properties paying the tax will not increase. If prime property prices continue rising then by the time the tax is introduced the starting point will be higher than £2m.”
Balls also outlined a progressive and banded system for the tax, with homes worth £2m - £3m paying no more than £250 per month. He added that those who were asset rich and cash poor would also be protected.
“Long-standing residents who now find themselves living in high-value homes but do not have an income high enough to pay the higher or top rate of income tax — in other words earn less than £42,000 a year — will be guaranteed the right to defer the charge until the property changes hands,” he wrote.
The Conservative Party was quick to criticise the plans, saying that Balls had backtracked on previous promises.
Priti Patel, the exchequer secretary to the Treasury, said, “It’s barely a month old, yet Labour’s NHS promise has completely unravelled.
“This panicked change in policy shows Ed Miliband’s and Ed Balls’ homes tax won’t raise the money they say it will.
“You can’t protect the NHS if you can’t make the sums add up, forget about the deficit, and bankrupt the economy like Labour did last time.
“The only way to secure the future of our NHS is to stick to our long-term economic plan.”