Analysis by upmarket estate agents Knight Frank has challenged claims that the so-called 'mansion tax' proposed by the Liberal Democrats would raise between £1.7bn and £2bn annually.

In a report Taxing High Value Homes, which it says is based on official data, Knight Frank says the current proposals would bring in about £1.3bn annually, before exemptions.

The Lib Dem plans, which have Labour's support, suggest a levy on properties worth £2m+. The tax would apply to the portion of residential value over £2m, at a rate of 1% annually.

Knight Franks says its analysis suggests that in order to raise the targeted revenue the value threshold for the tax would need to be reduced from £2m to either £1.5m (to raise £1.7bn) or £1.25m (to raise £2bn), and potentially even lower once exemptions and the cost of collection are taken into account.

Reducing the threshold from £2m to £1.25m would more than double the number of properties affected from 55,000 to 140,000.

Knight Frank warns the tax would have a disproportionate impact on London and the South East of England, with 86.4% of all £2m+ properties located in those two regions.

Heritage properties would also be targeted, as 16% of all £2m+ properties are listed buildings compared to less than 2% of all sub-£2m properties.

Knight Frank calculates that if the £2m threshold were adopted and not increased in line with house price inflation, over the next 25 years a total of 775,500 properties would be dragged into the mansion tax net, including all properties with a current value of £540,000 or more.

This means that some first time buyers buying through the government's help to buy scheme (upper limit £600,000) would be paying a mansion tax before they finished their mortgage term.