Refined mansion tax proposal being fed into debate on abolishing 50p tax rate for those earning more than £150,000

The Liberal Democrats are pushing for the eventual disbanding of the 50p rate of tax to see the implementation of a new land tax levied on properties above £1m.

In a refinement of their controversial mansion tax policy launched at their party conference two years ago, the Lib Dems now believe there is an argument for levying capital gains tax on any money made from the sale of a property after the first £1m.

The Lib Dem idea is being fed into the debate surrounding how to bring down the 50p rate for those earning more than £150,000. A review into the rate is expected to confirm suspicions it does not bring in much revenue but serves to deter international business from locating in the UK at a time when the chancellor is seeking to encourage inward investment and spur growth.

Over the weekend, George Osborne gave his clearest sign that the top rate would come down.

Speaking on BBC Radio 4, Osborne said there was "not much point" in having a tax that raised scant funds but that served to drive businesses out of Britain.

Osborne said: "I've said with the 50p rate I don't see that as a lasting tax rate for Britain because it's very uncompetitive internationally, and people frankly can move. What is it actually raising? It's only been in operation for a year, this tax, put in place by the last government."

Danny Alexander, the Lib Dem Treasury chief secretary, has said supporters of abolishing the 50p rate are living in "cloud cuckoo land". Vince Cable, the Lib Dem business secretary, has said if it goes it must be replaced by another imposition on the wealthy – possibly a mansion tax which would hit owners of the highest-value properties.