Mansion Tax Proposals – What High-Value Homeowners Need to Know
The government’s proposed new “mansion tax” – officially titled the High Value Council Tax Surcharge (HVCTS) – is beginning to take shape, with implementation currently planned for April 2028. While ministers present the measure as a way of modernising and rebalancing council taxation, it is already raising important questions for homeowners, landlords and property professionals alike, write Clive Scrivener MRICS and Zah Azeem MRICS, Partners at Wimbledon based Chartered Surveyors Scrivener Tibbatts.
Announced by Chancellor Rachel Reeves in the 2025 Autumn Budget, the surcharge would apply to residential properties in England valued at £2 million or above, i.e. a significant number here in Wimbledon and Prime Central London. The Treasury is presently consulting on how the scheme will operate in practice.
Housing Secretary Steve Reed has argued that the present council tax system is outdated and inconsistent. He highlighted the contrast between a typical Band D family house in northern towns such as Darlington or Blackpool paying well over £2,000 annually, while some of the country’s most valuable homes in central London currently attract relatively modest Band H council tax charges.
Under the proposals, fewer than 1% of homes nationwide are expected to fall within the scope of the surcharge. The additional revenue would be directed toward local authority funding.
How properties will be assessed
The Valuation Office Agency will undertake a targeted valuation exercise based on April 2026 values. This will combine professional valuation input with automated valuation modelling, taking account of factors such as property type, size, age, location, room numbers, parking provision and recent comparable sales evidence.
Affected homes would then be grouped into four value bands:
£2m–£2.5m
£2.5m–£3m
£3m–£5m
£5m+
Charges are expected to begin at £2,500 per annum for properties in the lowest band, rising to £7,500 annually for homes valued above £5 million. These figures would increase each year in line with CPI inflation.
Revaluations are proposed every five years. Newly built high-value properties would be assessed once completed or occupied, while substantially altered homes – for example following major extensions or redevelopment – could also be reassessed.
Who will be liable?
Unlike ordinary council tax, liability for the HVCTS would sit with the property owner rather than the occupier. In practical terms, this means landlords rather than tenants would be responsible for payment on rented properties.
Leaseholders of qualifying properties would also be liable, and where property is held within trust structures, trustees would generally assume responsibility.
Deferrals and exemptions
One of the more significant aspects of the consultation is the proposed deferral mechanism for those who are “asset rich but income poor”.
Homeowners with annual incomes below £35,000 may be able to defer payment until the property is eventually sold, provided the home is their principal residence. The scheme would not apply to second homes or corporate ownership structures.
Deferral provisions are also expected for certain disabled residents and individuals who are severely mentally impaired.
Additional discounts or exemptions are being considered for charities, Ministry of Defence accommodation, student halls of residence and refuges for victims of domestic abuse.
There is also discussion around tied accommodation, particularly within agriculture, where business owners may need to reside on-site as part of their operational requirements.
Appeals and challenges
As with council tax banding, homeowners would retain the right to challenge valuations and liability decisions.
The government proposes an extended initial appeal window of eight months, rather than the normal six months associated with standard council tax challenges. Importantly, however, any surcharge would still need to be paid while an appeal is underway, with refunds issued later if appropriate.
Likely market impact
From a valuation and market perspective, the surcharge is unlikely to alter behaviour at the very top end of the prime central London market. However, it may have a more noticeable effect in outer London and the South East, where long-term homeowners could find themselves newly caught by the £2 million threshold despite relatively ordinary retirement incomes.
There is already speculation that some owners may accelerate downsizing plans ahead of 2028, particularly if they anticipate increasing holding costs or difficulty qualifying for deferral.
As Sarah Coles of AJ Bell observed, quoted by Money Week, the proposals may create challenges for households whose wealth is tied up largely in property rather than income.
For now, the proposals remain under consultation, and several technical aspects are still open to amendment. Nevertheless, owners of higher-value residential property would be well advised to begin reviewing likely valuations, ownership structures and future estate planning considerations sooner rather than later.
If you would like to discuss something related to a property valuation specifically a Lease Extension, Freehold Valuations and Market Valuations for disputes, please contact Clive or Zah direct via email at clive@scrivenertibbatts.co.uk and zah@scrivenertibbatts.co.uk or call 020 8947 7040.
