Mansion Tax: What Is The High Value Council Tax Surcharge?

In the Autumn Budget 2025, the government announced a so-called ‘mansion tax’ and there are implications for some homeowners and potential buyers, particularly in London.

This guide covers the key details of the High Value Council Tax Surcharge – explaining when it comes into effect, where it applies, which properties are in scope, who it will affect and by how much.

Key takeaways: Mansion tax

• From the 2028/29 tax year, the High Value Council Tax Surcharge will add an additional annual levy for residential properties in England valued at over £2m.

• These valuations will be based on 2026 estimates from the Valuation Office Agency and there will be revaluations every five years.

• The bands start at £2,500 a year for homes worth £2m-£2.5m, rising to £7,500 a year for £5m+ properties.

• The surcharge applies to both houses and flats – while it will initially affect fewer than 1% of English properties, nearly three in four properties worth £2m+ are reportedly in London.

What is the mansion tax?

The mansion tax is an informal name for the new high‑value property levy that will apply to homes above a specific value in England from 2028.

It is officially called the High Value Council Tax Surcharge and will apply to residential properties in England with an estimated value of more than £2 million.

These estimations are based on valuations that the Valuation Office Agency will determine in 2026 as part of a targeted exercise and then reevaluate every five years.

The government will not use the current council tax bands based on property values from 1991.

In addition to the usual council tax, local authorities will collect surcharges on behalf of central government from April 2028, using the following bands:

• £2,500 annually on properties worth £2m-2.5m
• £3,500 annually on properties worth £2.5m-3.5m
• £5,000 annually on properties worth £3.5m-5m
• £7,500 annually on properties worth £5m+

It is going to be an annual surcharge on top of regular council tax. The additional revenue will support funding for local government services.

The surcharge amounts themselves are set to rise annually with the Consumer Prices Index from 2029-30, so the nominal cost will increase over time even if a property’s value remains the same.

In introducing the mansion tax, Rachel Reeves, the Chancellor, aims to make higher‑value properties contribute more. The government plans to raise £430m in revenue annually from 2028/29, according to estimated policy costs for the 2025 Budget.

It argues the charge will also improve “fairness within England’s property tax system” citing the example that under current council tax rules, an average band D charge for a property in England is £2,280, reportedly £250 more than for a £10m property in Mayfair, based on the band H charge in the City of Westminster.

Where does the mansion tax apply?

Despite the ‘mansion’ phrasing, the annual surcharge applies to both houses and flats, but excludes social housing.

Fewer than 1% of properties in England will be worth more than the initial £2m threshold, according to government estimates.

The concept of a mansion tax is not exclusive to England – many US states implement surcharges on higher-value homes or some form of progressive real estate tax.

The annual surcharge announced in the 2025 Budget will apply to properties in England only. Wales, Scotland and Northern Ireland have devolved tax systems and property charges. 

However, sources such as Tax Policy Associates expect these countries to follow suit. In the recent Scottish Budget 2026, a mansion tax for properties worth more than £1m was announced by the Scottish government.

In practice, the government will raise most of the revenue from the mansion tax in England from London properties. According to recent data from Bricks&Logic, approximately 73% of properties in England worth £2m or more are in Greater London, with the other eight regions accounting for roughly 27%.

Liability sits with the property owner rather than the occupier or tenant, even if the home is rented out.

How to prepare for the mansion tax

You only need to start thinking about and preparing for this additional charge if you own a property worth £2m and above, or if you expect to buy or sell one worth this amount.

While the formal estimate from the Valuation Office Agency is the one that ultimately counts, you could consider getting your own valuation to help set expectations. Learn more about the Fine Living valuation process – here you can also use our tool to get a valuation emailed to you within minutes.

According to several sources including Barnes Law, be aware that some homeowners and potential buyers are planning to adjust their asking prices or offers accordingly, a practice known as ‘price bunching’.

The surcharge is separate from and additional to stamp duty, capital gains tax and inheritance tax, but some homeowners or potential buyers may alter their transactions or holding structures because of it.

There will be a public consultation in early 2026 with further details about the new charge. The government says it will consider:

• A support scheme for those who may struggle to pay the charge 
• A set of reliefs and exemptions
• Special cases such as mixed‑use buildings with residential properties above, multiple dwellings on one title, or portfolios of flats in the same block
• How to treat those required to live in ‘tied properties’ as a condition of their job
• Proposed rules for more complex ownership structures including companies, funds, trusts and partnerships

On the latter, read the Fine Living guide on Buying Property Through A Limited Company Or A Trust for more details.

Final thoughts: Mansion tax

This article will be updated accordingly as and when details of the public consultation emerge, or further key information around the High Value Council Tax Surcharge in general.

If this article has helped you plan ahead, other popular guides include:

• How Much Does It Cost To Extend A Lease On A Flat In The UK?
• How To Rent Out Your House Or Flat
• How Do I Find Out What Restrictive Covenants Are On My Property?
• Buying Property Through A Limited Company
• Do I Need A HMO Licence For 3 Tenants?
• Non Resident Landlord Scheme (NRLS)

If you own or are looking to buy a property, no matter the valuation, the team at Fine Living can help you with the estimates and projected annual costs.

We stay updated with the very latest legislation, market trends and data, so please don’t hesitate to get in touch for more information.

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