High-Value Properties in England to Face New Council Tax Surcharge from 2028
Homeowners of properties valued at over £2 million in England are set to face a new high-value council tax surcharge from 2028, part of a wider effort by the government to address wealth inequality and raise additional revenue. The annual charge, often referred to in media circles as a “mansion tax,” will apply in four progressive bands, adding to existing council tax bills.
The surcharge is structured as follows:
- Properties valued £2m–£2.5m: £2,500 per year
- Properties valued £2.5m–£3.5m: £3,500 per year
- Properties valued £3.5m–£5m: £5,000 per year
- Properties valued over £5m: £7,500 per year
The Office for Budget Responsibility (OBR) estimates that the measure will generate approximately £400 million annually by 2029-2030. While fewer than 1% of properties in England are expected to be affected, the government anticipates the policy may influence property pricing, encouraging values to cluster just below surcharge thresholds.
Chancellor Rachel Reeves stated: “We are taking further steps to address longstanding wealth inequality in our country while ensuring fairness in our taxation system.”
While praised by some for providing clarity and certainty to homeowners, the policy has drawn criticism from the Institute for Fiscal Studies (IFS), which noted that council tax revaluation has long been overdue and that the surcharge design leaves room for improvement. Estate agents, including Savills, have suggested that the measure is likely to have a less disruptive effect on the housing market than an open-ended mansion tax, potentially prompting older homeowners to downsize over time.
The Local Government Association (LGA) emphasized the importance of government consultation with local authorities to address practical implementation issues. Cllr Pete Marland, Chair of the LGA’s Resources Committee, said: “Any additional funding raised through this new surcharge should directly support local services. Council tax reform must be clear, fair, and accountable.”
The government plans to base property assessments on 2026 valuations provided by the Valuations Office Agency, with properties in the top three council tax bands (F, G, and H) being reviewed for surcharge applicability. Reliefs and exemptions, including for individuals required to live in high-value properties for work purposes, will be consulted on prior to implementation.
This policy forms part of the government’s broader strategy to modernize the council tax system and ensure high-value homeowners contribute fairly while maintaining accountability and transparency.
