London will become the worst place among well-off countries to own a property if John Healey introduces a wealth tax, a new report is warning.

The Chancellor was told that such a new levy would make the UK the most expensive place to own a home among countries in the Organisation for Economic Co-operation and Development.

They include most of Europe, America, Canada, Korea, Japan, Australia and New Zealand.

The Chancellor is said to be considering raising capital gains tax in the Budget on October 28, though he is not expected to align it with income tax.

However, the Right-leaning Centre for Policy Studies (CPS) warned against such a move or the imposition of another wealth tax.

“The UK ranks 30th out of 38 OECD countries for the competitiveness of its tax system, according to the 2026 edition of the International Tax Competitiveness Index, published annually by the Tax Foundation,” it stressed.

“If the UK were to introduce a Wealth Tax, it would come last in the Property Tax category, making it the worst place in the OECD to own property or assets.

“It would come 35th overall.”

The property score in the index is calculated using wealth tax, inheritance tax, capital gains tax, stamp duty and other levies.

Mr Healey has stressed that he will stick to the fiscal discipline adopted by his predecessor Rachel Reeves to reassure the markets that the Labour government is not about to embark on a borrowing splurge to fund Andy Burnham’s radical reforms including his devolution revolution.

However, Daniel Herring, head of economic and fiscal policy at the CPS, said: “Rather than paying any attention to fiscal discipline, the Chancellor is likely to use his upcoming Budget to raise taxes in a bid to fund Labour's ever-growing spending pledges.

“The UK already has a tax system which does little to encourage growth and the options mooted would cause further damage to the economy, and our international standing.”

The Labour Government is already imposing a “mansion tax” on homes worth £2 million or more, which will hit London hardest.

There will be four “mansion tax” price bands with the surcharge starting at £2,500 a year for properties worth over £2 million to £2.5 million, £3,500 for those valued at £2.5 million to £3.5 million, £5,000 for homes worth £3.5 million to £5 million, and £7,500 for properties worth more than £5 million.

Mr Healey has reportedly ruled out lowering the threshold for the new property levy to £1.5 million.

However, he is expected to target the City with a tax raid on banks, possibly of £2 billion a year, to fund measures to ease the cost of living for millions of struggling households around the country.

He may lower business rates for some firms to try to revive high streets across Britain.