Yesterday’s Autumn Budget delivered by Chancellor Rachel Reeves confirmed a new levy targeting high-value properties in England—the so-called ‘Mansion Tax’. Officially termed the High-Value Council Tax Surcharge, this change will impact a small but significant portion of the housing market, particularly in London and the South East.
Here at KhanMather, your trusted legal partner, we’ve broken down the key details and what they mean for homeowners, buyers, and investors.
What Exactly Has Been Announced?
Despite speculation about broader changes to Stamp Duty Land Tax (SDLT), the Chancellor focused her property tax reform on an annual levy for the most expensive homes.
The key points are:
It’s an Annual Surcharge: This is not a one-off tax like SDLT, but an annual surcharge added to your existing Council Tax bill.
The Threshold: The tax will apply to properties in England valued at £2 million and over.
Implementation Date: The new surcharge will take effect from April 2028.
Valuation Basis: The properties will be valued based on their market worth in 2026 by the Valuation Office Agency. These valuations will be repeated every five years.
How Much is the Annual Surcharge?
The surcharge is structured into four bands, increasing progressively based on the property’s value.
House Value Band (2026 Valuation) Annual Surcharge (from April 2028)
£2.0m – £2.5m £2,500
£2.5m – £3.5m £3,500
£3.5m – £5.0m £5,000
£5.0m+ £7,500
The surcharge will be payable by the property owner, not the occupier, and will be raised annually in line with the Consumer Price Index (CPI) measure of inflation.
What Does This Mean for You?
- High-Value Homeowners
If your property is currently valued near or above the £2 million threshold, you have a window of time to plan. The true impact will hinge on the forthcoming 2026 revaluation. If your home falls just over the £2.0m or £2.5m mark, the surcharge will add a significant running cost to your annual budget.
- Prospective High-Value Buyers
Buyers in the £2m+ bracket will need to factor this annual charge into their affordability calculations alongside existing costs like Stamp Duty Land Tax (SDLT). For properties near the band boundaries (e.g., just over £2.5m), the tax may introduce a ‘cliff-edge’ effect, potentially softening demand for properties just above the band limits.
- Property Investors and Landlords
For properties held as investments, this surcharge adds to the growing tax burden on landlords. This follows the announced 2% increase in property income tax rates (taking the basic rate to 22%, higher rate to 42%, and additional rate to 47%) from April 2027. Landlords will need to carefully model the long-term profitability of high-value rental assets.
Our View: Act Now, Not Later
While the new ‘Mansion Tax’ doesn’t begin until 2028, the 2026 valuation is the critical starting point. This creates a period of uncertainty and potential market distortion, particularly around the £2 million mark.
The most important step for owners of high-value property is to seek expert advice now to understand the valuation process and how the surcharge could affect your long-term property strategy, whether that involves retention, sale, or estate planning.
For advice on how the High-Value Council Tax Surcharge affect your property, please contact Hannah Cohen on 0161 850 9911.