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What is the mansion tax, who will pay it and how will it work in practice? We’ve asked an expert to explain how the High Value Council Tax Surcharge will operate, how much it will cost, and how properties are likely to be valued.
KEY INFORMATION
The mansion tax – or High Value Council Tax Surcharge to give it its proper title – will apply to residential properties in England valued above £2 million, from April 2028. It was announced in the Budget 2025.
Homes that fall above this threshold will incur an additional annual charge, ranging from £2,500 to £7,500, depending on the property’s value band.
The mansion tax will apply to homeowners with properties valued at more than £2 million in 2026, and be collected alongside council tax from April 2028. However, unlike with council tax, the money will go to the Treasury, not local authorities.
There will be a consultation on the details of the scheme in early 2026.
If you own residential property in England valued at more than £2 million, the rate of mansion tax you’ll pay will be set by a sliding scale.
There will be four price bands with the surcharge rising from £2,500 for a property valued in the lowest £2 million to £2.5 million band, to £7,500 for a property valued in the highest band of £5 million or more.
| Threshold (£m) | Rate (£) |
| £2-2.5 | £2,500 |
| £2.5-3.5 | £3,500 |
| £3.5-5 | £5,000 |
| £5+ | £7,500 |
Possibly. This is one of the areas the government says it will be consulting on, along with the details of the reliefs and exemptions, the design of an appeals system, and the support mechanisms that will be available.
The OBR’s report says in its costings it “assumes that some current council tax exemptions will apply and that there will be a deferral scheme for those unable to pay immediately.”
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The mansion tax will be paid by the person who owns the property, not the occupiers.
The government estimates over 100,000 households will be hit by the mansion tax.
Homeowners in London and the South East will bear most of the brunt of the new property tax. Around 50% of all properties in England valued at over £2 million are in London and 85% in the South East, Hamptons analysis shows.
Guidance on the High Value Council Tax Surcharge issued by the government says: “The Valuation Office will conduct a targeted valuation exercise to identify properties above £2 million and therefore in scope. Fewer than 1% of properties in England are expected to be above the £2 million threshold. Revaluations will be conducted every five years.”
A property’s value is influenced by numerous factors including location, size, condition, layout, and overall market appeal.
Values naturally fluctuate and may change quickly if new comparable evidence emerges, such as a recent sale of a similar property nearby.
For typical residential streets, Chartered Surveyors can often rely on multiple comparable sales to form an informed opinion.
High-value properties in the UK, however, are a different story. The types of homes targeted by the mansion tax are often unique, with little or no directly comparable evidence. On streets where every house is distinct, Surveyors cannot easily rely on standard comparisons.
Plus, desktop valuations have a tendency to overvalue properties because of the “mathematical average it uses”, according to The Times.
This has led to concerns the whole process will be bogged down with mass appeals from homeowners. Jump to Can I challenge my mansion tax valuation?
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Currently, most tax-related valuations are commissioned and paid for by the individual taxpayer, who is legally responsible for the property and carried out by a valuation surveyor. Examples include:
The Valuation Office Agency (VOA) has the right to challenge these valuations but rarely does so when the reports are well-evidenced.
However, the motivation behind seeking valuations for the mansion tax is different. Unlike inheritance tax or capital gains tax, where the taxpayer is proactively undertaking an action, mansion tax valuations arise from a compulsory requirement to pay tax, not from a transaction the owner chooses to pursue.
The working assumption at the moment is that the Valuation Office Agency will undertake the valuations, with taxpayers having the right to challenge them.
While a process for appeals is almost certain, it’s not yet clear how the process of challenging a mansion tax valuation will work.
However, it’s expected that a large number of homeowners will challenge valuations, given the financial impact of the mansion tax, particularly if the property has been valued by desktop.
Many homeowners are expected to book valuation surveys in advance so they’re in a strong position to challenge the mansion tax valuation if they believe it’s wrong.
A similar tax exists: Annual Tax on Enveloped Dwellings (ATED), charged on certain properties owned by companies or partnerships. ATED also uses property value bands and requires revaluation every five years. Taxpayers may appoint their own Chartered Valuation Surveyor, and although the VOA can challenge valuations, it rarely does.
Absolutely yes. There are real concerns on the accuracy and efficacy of how the VOA, even with good intentions, can provide fair valuations here.
By getting your own property valuation, you’ll have an expert opinion on the value of your property. Then, if the valuation you receive from the VOA is higher, you’ll be in a good position to start your challenge.
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The initial mansion tax valuations will be based on April 2026 market values, and the cash thresholds for the bands will be uprated annually in line with consumer price inflation rather than being frozen.
How exactly the five-year revaluation will be carried out (for example, whether it will use a full valuation exercise, modelling, or specific data sources such as Land Registry evidence) is due to be set out through the government’s consultation and subsequent legislation, so the method is not yet confirmed.
There are a number of different ways the mansion tax may affect homeowners:
The mansion tax is likely to push down property prices around each band boundary. However, as this will affect the higher end of the market, it’s unlikely to have an impact on the majority of buyers and sellers.
Some homeowners may choose to downsize to avoid paying the mansion tax. However, the high cost of stamp duty will put some potential movers off.
However, given that this only affects properties worth over £2 million, it’s not expected to have a widespread impact.
Use our stamp duty calculator to help you work out how much stamp duty you will need to pay
The introduction of a mansion tax could see owners of expensive second homes facing a double whammy of extra council tax charges in the form of:
For more detailed information, read our guide Second home council tax explained.
The government says the mansion tax will be a “significant reform to improve fairness within England’s property tax system”. It also says: “Under the current system, the average band D charge for a typical family home across England is £2,280. That is £250 more per year than a £10 million property in Mayfair, based on the band H charge in the City of Westminster, currently pays.”
There has been a mixed response from the public to the announcement of the mansion tax, and criticism from within the industry of it being unfair.
A fifth of the UK public (21%) don’t think the mansion tax is fair, a poll from mortgage lender Together shows. The highest proportion of those viewing the mansion tax as unfair were in Bristol (27%), London (23%) and Plymouth (23%).
However, while a minority oppose the mansion tax, the figures show that many more people in the UK support it.
To get an idea of your property’s current value, you can use our instant valuation tool:
Find out how much your house is worth with our online tool.
Paula Higgins CEO at HomeOwners Alliance says: “It’s clear the government wants higher-value homes to contribute more. We’ll wait to hear further details about how the mansion tax will be set up in the planned public consultation in early 2026. Another key concern for homeowners is whether this is the thin end of the wedge? Once measures are introduced, they have a habit of being extended or thresholds not being updated, and more people end up paying tax as a result. This mansion tax could quickly become relevant for more homeowners than the Chancellor anticipates.”
“We expect these arbitrary thresholds of a mansion tax will distort the market, which OBR has recognised will cause bunching of sales just below the thresholds.”
HomeOwners Alliance’s Paula Higgins was quoted in the FT saying she was “sceptical about whether the revaluation needed for this ‘mansion tax’ can be delivered cleanly and on time. All homeowners will likely appeal at each bracket.”
Paula was also quoted in The Times warning that the tax will hit ordinary homes in London and the South East more than the rest of the UK. She also highlighted the risks of desktop valuations of these properties, saying: “When considering properties priced at £2 million plus in areas like Hampstead or Highgate, some of which may not have been sold in 30 years, each house is unique and requires a more individualised assessment.”
As April 2026 approaches, further Government guidance will be published. In the meantime:
The details will be important, and we will continue monitoring announcements as they are released.
While there is currently no official mansion tax calculator provided by the Government, homeowners can estimate their liability by using the published bands and an indicative property valuation.
Once guidance is finalised, tools for calculating mansion tax liability are likely to emerge.
With thanks to Dan Knowles FRICS, Director and RICS Registered Valuer at Websters Surveyors
The mansion tax is a new property tax, officially called the High Value Council Tax Surcharge. It applies to homes in England valued above £2 million and will cost £2,500-£7,500 per year, depending on property value. Find more information in our guide Mansion Tax: How the “High Value Council Tax Surcharge” will work.
How much the mansion tax will cost depends on the property’s value band. Annual charges range from £2,500 for properties in England valued between £2m-£2.5m up to £7,500 for homes worth over £5m.
There is currently no official UK mansion tax calculator, but homeowners can estimate costs using the published value bands and an approximate property valuation.
Yes. Homeowners will be able to challenge mansion tax valuations if they believe the property has been placed in the wrong band, or the wrong estimated value.
A mansion tax, officially called the High Value Council Tax Surcharge, will be introduced on homes worth over £2 million, Chancellor Rachel Reeves announced in the Budget on 26 November 2025.
According to the Office for Budget Responsibility, the mansion tax is expected to raise £0.4 billion in 2029-30.
When the mansion tax was announced in the UK’s November 2025 Budget, the supporting documents indicated that the implementation details were still under consideration.
However, it’s understood that the assessment is set to use a version of the Valuation Office Agency (VOA)’s “automated valuation model”, a tool that analyses location, property attributes and recent sales figures.
As the saying goes, nothing is certain except death and taxes. If the Government believes the mansion tax may be payable, HMRC will likely instruct the VOA to carry out their own valuation.
The original mansion tax plan was to target homes worth over £1.5 million, according to reports. But this threshold was increased after some MPs warned that setting it at £1.5 million would mean many Labour voters, including public sector professionals, would have been hit by the levy, the Financial Times reported.
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