The government has provided more details on its plans to introduce a new high-value council tax surcharge – dubbed a ‘mansion tax’ by the media.
Fom April 2028, the government said that it plans to introduce a new High Value Council Tax Surcharge (HVCTS) on owners of residential property in England worth £2 million or more.
A public consultation on the details of the surcharge will be held in early 2026.
The surcharge will not be determined by current Council Tax bands, which are based on property values from 1991. For example, bands F, G and H will not be used to determine eligibility for the surcharge.
The Valuation Office Agency will carry out a separate, targeted valuation exercise to determine a property’s value in 2026. If a property is identified as being worth £2 million or more, it will then be placed into one of four HVCTS bands.
This exercise is separate from, and without reference to, existing Council Tax bands. Council Tax bands will not be used to determine eligibility for the surcharge and will have no bearing on a property’s HVCTS band.
As this charge is separate from Council Tax, current Council Tax bands will not be affected and will still apply. Equally, a change in Council Tax band will not affect eligibility for the surcharge.
When Reeves announced the introduction of a ‘mansion tax’, she said the surcharge is expected to apply to around 100,000 homes.
Data from online property platform Rightmove shows that less than 0.5% of all homes sales agreed this year have been for properties with an asking price of over £2 million.
It also said that around 1% of homes for sale on its platform are priced above this threshold.
The market may already have been reacting to speculation over the introduction of a ‘mansion tax’, as Rightmove’s data shows that sales agreed for homes above the £2-million threshold have declined by 13% year-on-year.
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