Mansion tax: The High Value Council Tax Surcharge will be implemented by the government

A mansion tax for high-value properties is being developed for April 2028

We disclose when the fee must be paid as well as how to obtain an exemption.

The so-called "mansion tax," which would impose an additional fee on owners of homes in England valued at £2 million or more starting in April 2028, has been outlined by the government.

In her 2025 Autumn Budget, Chancellor Rachel Reeves revealed plans for the High Value Council Tax Surcharge (HVCTS), which she claimed would improve the fairness of the council tax system.

Consultation on the Treasury proposals is currently underway.

BFIA's current problems. According to Housing Secretary Steve Reed, residents of a band D property in Darlington or Blackpool that is currently valued at about 400,000 pay between 2,400 and 2,600 per year under the current council tax system.

Current Videos From IMG IMG In contrast, residents of a 10 million-dollar Mayfair mansion in Band H pay about 2,100 annually.

"Previous governments knew how unfair this is, but they did nothing," he declared. The country's most valuable property owners will pay their fair share through the HVCTS. The "

Less than 1% of residential properties in England, according to Treasury estimates, will be subject to the HVCTS, which will be paid in addition to council tax bills.

Funding for local government services will be supported by the money raised through the HVCTS.

How the mansion tax will be applied to high-value residences.

Using professional valuers and industry-standard automated valuation models that evaluate sales data and property attributes, the Valuation Office (VO) will carry out a targeted valuation exercise to identify properties within scope.

Homes valued at more than £2 million as of April 2026 will be identified, and the sale price, property type, size, age, number of rooms, and parking will all be taken into account.

After that, high-value homes will be divided into four bands.

These are raised annually by CPI inflation and begin at 2,500 for a property valued in the lowest band of 2 million to 2.5 million and reach 7,500 for a property valued in the highest band of 5 million or more.

Every five years, the VO will conduct revaluations.

Properties constructed following the HVCTS's implementation but prior to the next planned revaluation will either be valued and banded on completion or the day they are occupied.

According to the consultation, homes that have undergone substantial improvements or modifications after the implementation datefor instance, by adding a sizable extensionwill be revalued and banded at the earliest of either the next revaluation or the property's sale.

Who will cover the tax on the mansion?

The HVCTS will be paid by a property's owners rather than its occupants. This implies that if a house valued at more than £2 million was being rented out, the landlord would be responsible for paying the fee rather than the tenant.

This implies that in a high-value house, leaseholders will be responsible for the mansion tax.

Trustees will be held accountable when property is held in trust for a child.

Tax exemptions for mansions.

The mansion tax will be exempt for certain people, such as those who inherited or purchased their home but now earn less, or those who go through a brief change in circumstances like losing their job or becoming ill.

According to the government, those who meet certain eligibility requirements will be able to postpone paying HVCTS until a property is sold under a deferral scheme.

This will not be intended for second homes or businesses that own real estate, but rather for people with lower incomes, with a 35,000 income threshold.

In some situations, deferral will also be possible if the property serves as the primary residence of a disabled or severely mentally impaired person.

Tax reductions for mansions.

The government has suggested providing a discount or exemption to charitable organizations, as well as properties like residence halls, properties owned by the Ministry of Defense, and organizations that primarily house victims of domestic abuse.

Discounts might also be available to those who own a property connected to their job.

According to the consultation: "For practical reasons, business owners in some industries, especially agriculture, may need to reside on the property where their company operates. A farmer might, for instance, be required to own and occupy a house on their farm.

Ownership and occupation are less likely to coincide outside of agriculture. For instance, a religious organization usually owns the housing used for its members rather than the individuals who live there. The "

When will you be required to pay the mansion tax?

Councils will collect the HVCTS concurrently with council taxes.

Local authorities will identify owners and issue the first bills in March 2028 once the valuations are complete.

For information on deferral and discounts, you can get in touch with your local government before your first bill is due or whenever your situation changes.

Can you contest the tax on mansions?

In the same way that you can contest council tax charges, homeowners will be able to contest valuations.

You can file a complaint with the VO or the local government if you believe you have been wrongly billed or banded.

There will be an extended period for homeowners to contest the new High Value Council Tax Surcharge (HVCTS).

Instead of the standard six-month period for mainstream council tax, the government is offering an initial eight-month period to contest banding.

Similar to council tax, if someone files an appeal or challenge, they will still have to pay HVCTS.

If necessary, liabilities will be adjusted or overpayments will be reimbursed.

AJ Bell's head of personal finance, Sarah Coles, stated: "There will be plenty of people playing the tiniest violins in the world for those who live in expensive homes. Those who are wealthy in assets but lack money, however, may face difficulties. If they choose to proceed with any downsizing plans, they might find it difficult to sell before the charge takes effect. The "