From April 2028, owners of homes valued at £2 million or more will pay a new annual surcharge on top of their council tax, officially known as the High Value Council Tax Surcharge and often referred to as the “mansion tax”.
Under the new regime, properties with a value above £2 million will attract an extra levy each year alongside standard council tax.
The tax will be based on revaluations carried out in 2026 and applied from April 2028. It’s estimated that fewer than one per cent of properties in England will fall into scope, equivalent to around 100,000 high value homes, with around half of those in London and most of the rest in the southeast of England.
The surcharge will be applied in a tiered structure, with annual charges rising from £2,500 for properties just over the £2 million threshold to around £7,500 for homes valued at £5 million or more.
The Valuation Office Agency (VOA) will undertake a consultation on a targeted valuation of properties, likely by use of publicly available data rather than inspection of properties.
The High Value Council Tax Surcharge will be collected by local authorities on behalf of central Government.
It does not replace standard council tax but is added to it and properties will be revalued periodically to ensure the surcharge reflects current market values.
Unlike council tax bands, which are based on 1991 values, the surcharge is targeted exclusively at the top end of the market, where properties may enjoy large market gains without higher local tax contributions.
For owners of high value homes, including private landlords, the surcharge represents a new recurring cost.
Financial modelling suggests the tax could raise around £400 million per year by the 2029/30, with an average extra bill of about £4,500.
This change is likely to affect decisions around letting and selling properties. Some landlords may pass on part of the surcharge through higher rents where the market allows.
Second home owners facing premiums both from the surcharge and existing second home council tax may find the costs particularly steep.
There are early indications that the policy is already influencing market behaviour. Data from Estate Agent Today shows sales agreed for homes over £2 million have fallen year on year, suggesting a degree of buyer hesitation in the prime market.
Analysts also expect “bunching” around the surcharge threshold, with sellers pricing properties just below £2 million to avoid the extra tax.
The mansion tax marks a significant shift in how high value residential property is taxed in England.
While only a small share of homes will be affected directly, the surcharge introduces a notable new cost for affluent homeowners and investors.
Landlords and high value homeowners should review their portfolios and consider the financial impact of the surcharge, which could influence holding strategies and pricing.
The High Value Council Tax Surcharge introduces a new layer of complexity for owners of high value residential property. Whether you are a homeowner, landlord or property investor, early planning will be key to understanding the potential cost and wider implications for your portfolio.
Our property tax team advises on the financial impact of the mansion tax, including valuation considerations, ownership structures and forward planning. For tailored advice, speak to our property expert and Partner, Andy Noton (andrewnoton@lubbockfine.co.uk) who can help you assess how the surcharge may affect your position and what steps you may wish to take ahead of April 2028.
