From April 2028, homeowners with high-value residential properties in England could face an additional annual charge under the new High Value Council Tax Surcharge (HVCTS), commonly known as the “mansion tax”.
The proposed charge will apply to properties valued at £2 million or more and will be payable in addition to the existing council tax bill. Although the measure is expected to affect fewer than 1% of properties in England, it could represent a significant additional cost for homeowners whose properties fall within the new valuation bands.
Understanding how the surcharge will work, who will be responsible for paying it and how property valuations will be determined can help homeowners prepare for the changes.
In this guide, we explain the proposed High Value Council Tax Surcharge, the expected charges for 2028/29, the valuation process and the key points homeowners should know before the new rules take effect.
What Is the High Value Council Tax Surcharge?
The High Value Council Tax Surcharge is a new charge proposed by the UK Government for high-value residential properties in England. It is commonly referred to as the mansion tax because it is designed to apply to some of the country’s most expensive homes.
The charge is scheduled to take effect from 6 April 2028 and will apply to properties valued at £2 million or more.
Unlike a replacement for council tax, the HVCTS will be an additional charge. Homeowners whose properties fall within its scope will continue to be responsible for their existing council tax, alongside the new surcharge.
The Government estimates that fewer than 1% of residential properties in England will be affected. This means the measure is expected to target a relatively small proportion of the housing market, particularly properties at the higher end of the property value scale.
The detailed rules, including the treatment of different types of ownership and the circumstances in which relief may be available, are subject to the Government’s final arrangements and legislation.
When Will the High Value Council Tax Surcharge Start?
The new charge is scheduled to come into effect on 6 April 2028, meaning it will apply from the 2028/29 tax year.
Homeowners with properties valued at £2 million or more should use the period before implementation to understand the proposed rules and consider how the additional cost could affect their household finances.
The Government has consulted on the design and administration of the surcharge. At the time of writing, its formal response to the consultation had not yet been published, and legislation to establish the charge was expected to be included in a future Finance Bill.
As a result, some details may change before the surcharge comes into force.
How Much Will the High Value Council Tax Surcharge Cost?
The annual charge will depend on the property’s assessed value. Under the proposed structure for 2028/29, properties will be placed into one of four valuation bands.
The proposed annual charges are as follows:
| Property value | Annual HVCTS charge |
| £2 million to £2.5 million | £2,500 |
| £2.5 million to £3.5 million | £3,500 |
| £3.5 million to £5 million | £5,000 |
| £5 million or more | £7,500 |
These amounts will be payable in addition to the property’s existing council tax.
For example, if a property is valued at £2.3 million, it would fall within the first band under the proposed structure, resulting in an annual surcharge of £2,500.
A property valued at £4 million would fall within the £3.5 million to £5 million band, attracting a proposed annual charge of £5,000.
For properties valued at £5 million or more, the proposed surcharge would be £7,500 per year.
These figures relate to the proposed 2028/29 charging structure. Homeowners should check the final rules when they are published, as the arrangements may be subject to change.
Will the High Value Council Tax Surcharge Increase Every Year?
Yes. Under the proposed arrangements, the surcharge will increase annually in line with rises in the Consumer Prices Index (CPI).
CPI is a measure of inflation that tracks changes in the prices of goods and services. Linking the surcharge to CPI means the annual charge may rise over time as inflation increases.
For homeowners affected by the measure, this is an important consideration when estimating the longer-term cost of owning a high-value property.
The initial charge may be set at a particular amount for 2028/29, but the cost in subsequent years could be higher. Homeowners should therefore consider the potential for future increases when reviewing their property-related expenses.
Who Will Be Responsible for Paying the Surcharge?
Under the proposed rules, liability for the HVCTS will generally fall on the homeowner rather than the person occupying the property when the property is not owner-occupied.
This is particularly relevant for landlords and owners of high-value properties that are rented out or occupied by someone else.
For example, if a homeowner owns a property valued at £3 million and rents it to a tenant, the proposed arrangements would place responsibility for the surcharge on the homeowner rather than the tenant.
This distinction is important because the person paying the existing council tax may not necessarily be the person responsible for the new charge.
The Government has consulted on how the term “owner” should be defined. The final rules will be important in determining liability in more complex ownership arrangements, including properties held through different legal structures.
Homeowners should review the final legislation before assuming how the rules will apply to their individual circumstances.
How Will Properties Be Valued?
Property valuation will be a central part of the HVCTS system because the assessed value will determine whether a property falls within the scope of the charge and which surcharge band applies.
The Valuation Office will conduct a targeted valuation exercise to identify properties that meet the relevant threshold.
Properties valued at £2 million or more will be assigned to the appropriate valuation band, with the annual charge determined by that band.
The proposed approach also provides for valuations to be carried out again every five years.
This periodic review is intended to ensure that property valuations remain relevant over time. However, homeowners should be aware that a property’s assessed value may affect the amount of surcharge payable if it moves into a different band following a future valuation.
The valuation used for the surcharge should not automatically be assumed to be the same as a homeowner’s original purchase price or their own estimate of the property’s current market value. The final valuation rules will determine how assessments are conducted and how any disagreements can be addressed.
Can Homeowners Challenge Their Property Valuation?
The Government’s consultation included proposals for a process through which homeowners could challenge their property’s valuation band or dispute their liability for the surcharge.
This could be important where a homeowner believes the valuation does not accurately reflect the property’s value or that the charge has been applied incorrectly.
However, the precise process, eligibility requirements and deadlines will depend on the final arrangements.
Homeowners who receive a valuation or notice of liability should review the details carefully once the system is introduced. Keeping relevant property information and valuation evidence may also be helpful if a dispute arises.
The final rules should explain how challenges can be submitted, what evidence may be required and how decisions will be reviewed.
Will Any Discounts or Exemptions Be Available?
The Government’s consultation considered a proposed list of property-level discounts and exemptions, together with support arrangements for people who may struggle to pay the charge.
These measures could be important for homeowners whose circumstances make it difficult to meet the additional cost.
However, the availability and scope of any discounts, exemptions or payment support should not be assumed until the Government confirms the final rules.
Homeowners should look out for further guidance explaining which properties may qualify for relief, how applications will work and what evidence may be needed.
Those concerned about affordability should pay particular attention to the final provisions governing payment support.
How Will the Surcharge Be Collected?
The proposed HVCTS will be administered by local authorities alongside the existing council tax system.
This means local authorities will have a role in billing and collecting the charge, although the final administrative arrangements will depend on the legislation and supporting guidance.
The Government’s consultation considered several practical aspects of administration, including the billing process, enforcement mechanisms and how homeowners could challenge their liability.
Homeowners should review any official correspondence relating to the surcharge and ensure that their property and ownership details are accurate.
Once the system is introduced, it will be important to follow the payment instructions and deadlines provided by the relevant authority to avoid potential problems.
What Should Homeowners Do Before April 2028?
Although the surcharge is not scheduled to begin until April 2028, homeowners with high-value properties can start preparing in advance.
1. Review your property’s estimated value
If your property may be worth £2 million or more, consider reviewing its current estimated market value. Remember that the official valuation process and the applicable valuation rules will determine whether the surcharge applies.
2. Understand the potential annual cost
Review the proposed charging bands and consider how an additional annual payment could affect your household budget or property-related expenditure.
3. Consider your ownership arrangements
If you own a property that is rented out, jointly owned or held through a legal structure, check the final rules to establish who will be responsible for the charge.
4. Follow Government announcements
The consultation response and subsequent legislation should provide greater clarity on valuations, exemptions, payment arrangements and challenges.
5. Seek professional advice if necessary
If you own a high-value property or have a complex ownership arrangement, a qualified tax advisor or property professional accountant may help you understand how the final rules could affect you.
Taking these steps early can help reduce uncertainty and make it easier to plan for the introduction of the surcharge.
Frequently Asked Questions
1. What is the High Value Council Tax Surcharge?
The High Value Council Tax Surcharge is a proposed additional annual charge for residential properties in England valued at £2 million or more. It is commonly known as the mansion tax and will be payable in addition to existing council tax.
2. When will the HVCTS come into effect?
The charge is scheduled to begin on 6 April 2028, with the proposed charging bands applying for 2028/29.
3. How much will homeowners have to pay?
The proposed annual charges for 2028/29 range from £2,500 for properties valued between £2 million and £2.5 million to £7,500 for properties valued at £5 million or more.
4. Will tenants have to pay the surcharge?
Under the proposed arrangements, liability will fall on the homeowner rather than the occupier where the property is not owner-occupied. The final rules will clarify how ownership and liability are determined in different circumstances.
5. How often will properties be revalued?
The proposed system provides for revaluations every five years. The property’s assessed value will determine the relevant surcharge band.
6. Will the surcharge replace council tax?
No. The HVCTS is intended to be an additional charge, meaning affected properties will remain subject to the existing council tax system.
7. Can homeowners appeal against the charge?
The Government’s consultation considered a process for challenging property valuation bands and liability. The final rules will set out the procedure and applicable requirements.
8. Will the surcharge increase in future years?
The proposed arrangements provide for annual increases in line with rises in the Consumer Prices Index (CPI). The amount payable may therefore increase over time.
Final Thoughts
The introduction of the High Value Council Tax Surcharge is expected to create an additional financial responsibility for owners of some of England’s most expensive residential properties from April 2028.
With proposed annual charges ranging from £2,500 to £7,500, understanding the valuation bands, ownership rules and payment arrangements will be important for anyone who may be affected.
Although the Government expects fewer than 1% of properties to fall within the scope of the charge, homeowners should not overlook the potential impact on their annual property costs.
As the consultation response and legislation are published, further details should clarify how the surcharge will operate in practice, including the availability of exemptions, the valuation process and the arrangements for challenging decisions.
Disclaimer: This article is for general information purposes only and should not be treated as tax, legal or financial advice. The High Value Council Tax Surcharge arrangements described above are based on the proposed framework and may change when the Government publishes its final response and legislation.