The 'Mansion Tax': the High Value Council Tax Surcharge explained (with calculator)

The 'mansion tax': a £2,500–£7,500 yearly charge on £2m+ homes

Announced at the November 2025 Budget: from April 2028, owners of English homes valued over £2 million pay an annual High Value Council Tax Surcharge — the first new recurring property tax on homes in a generation.

Status: Legislated policy — from April 2028 Region: England Party: Labour (in government) From: Autumn Budget, November 2025

What's happening

From 1 April 2028, residential properties in England valued at £2 million or more (at 2026 valuations) attract an annual surcharge on top of normal council tax, paid by the owner (not the tenant). The charge is banded: roughly £2,500 a year for homes valued £2–2.5m, rising through intermediate bands to £7,500 for homes over £5m, with values assessed by the Valuation Office and uprated over time. Around 100,000–150,000 properties — well under 1% of England's homes, heavily concentrated in London and the South East — are expected to be affected.

The case for

Council tax is capped at Band H, so a £20m mansion currently pays at most about twice a Band D semi — this corrects the top end without a full revaluation.
It's hard to avoid: property can't move offshore.
It raises revenue from the wealthiest while leaving 99%+ of homeowners untouched.

The case against

Cliff edges: a home valued £1.99m pays nothing extra; £2.01m pays £2,500 — expect valuation disputes and price bunching just below the line.
Asset-rich, cash-poor: long-time owners (especially pensioners in London) may owe thousands yearly without the income to pay; a deferral-until-sale option has been signalled to answer this.
Critics call it a stepping stone toward wider property revaluation — supporters quietly agree, and point to the Proportional Property Tax as the full version.

Where the parties stand

Labour legislated it. The Conservatives and Reform have attacked it as a tax on aspiration — repeal pledges are expected but not yet formalised. The Greens would go further (taxing wealth annually above £10m). The Lib Dems have historically supported higher-value property taxation.

Sources & further reading

HM Treasury — Autumn Budget 2025 — the announcement and costings.
House of Commons Library — briefings on the surcharge's design.
Institute for Fiscal Studies — analysis of property-tax reform options.

Figures are from public material and may change. Not financial, legal or tax advice.

Frequently asked questions

What is the High Value Council Tax Surcharge?

An annual charge of roughly £2,500 to £7,500 on English homes valued over £2 million (2026 valuations), payable by the owner on top of normal council tax from April 2028. It was announced at the November 2025 Budget and is widely nicknamed the mansion tax.

How much is the mansion tax on a £3 million house?

About £3,500 a year under the announced bands (£2–2.5m ≈ £2,500; £2.5–3.5m ≈ £3,500; £3.5–5m ≈ £5,000; over £5m ≈ £7,500). Exact boundaries are set in regulations — use the calculator above.

Will pensioners have to sell their homes to pay it?

The government has signalled a deferral option letting cash-poor owners roll the charge up until the property is sold, mirroring how Ireland and parts of the US handle equivalent taxes. Details come in regulations before 2028.

Would other parties scrap the mansion tax?

The Conservatives and Reform UK have condemned it and repeal pledges are expected, though not yet formal manifesto commitments. The Greens would replace piecemeal charges with an annual wealth tax; the Proportional Property Tax campaign would fold it into a single 0.48% annual property charge.