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Post updated: December 3rd, 2025
KEY INFORMATION
The mansion tax is an annual surcharge that owners of properties worth more than £2 million in England will need to pay. It was announced by Chancellor Rachel Reeves in the Budget 2025 on 26 November.
The introduction of the tax, officially called the High Value Council Tax Surcharge, was widely expected.
There will be a consultation on the details of the scheme in early 2026. 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.
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 (£) |
| £2.0-2.5 | £2,500 |
| £2.5-3.5 | £3,500 |
| £3.5-5.0 | £5,000 |
| £5+ | £7,500 |
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.
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.”
The government estimates over 100,000 households will be hit by the mansion tax.
Homeowners in London and the South East would 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.
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%).
Ryan Etchells, chief commercial officer at Together, said the policy risked placing particular strain on older owners whose properties have risen sharply in value over several decades.
“This means ‘empty nesters’ and people who bought their property decades ago simply as a family home, not as an investment, will now have to cough up thousands just to continue living in their own home,” he said.
However, while a minority oppose the mansion tax, the figures show that many more people in the UK support it.
News that council houses worth more than £2 million will avoid the mansion tax has sparked criticism.
Social housing will be exempt from the mansion tax, the Government confirmed in documents published following the Budget, which said: “Social housing will not be in scope.”
Exact figures on the value of social houses is not available, but across England there were more than 110 social homes, current or former, sold for more than £2m since 2021, which could therefore attract the mansion tax, a Telegraph analysis of property sales data and EPC ratings found.
Some of these properties are likely to have been sold since, but the analysis highlights that a sizeable number of social housing would cross the £2 million threshold, the Telegraph reports.
In most cases tenants are responsible for paying their council tax, including those living in social housing. The mansion tax will function as a council tax surcharge – with the revenue paid to central government – but it will be owners who are liable, rather than occupiers.
Property prices are so high in London that while some one-bedroom flats will be stung by the mansion tax, a castle outside the capital will escape it, The Standard reports.
It uses the example of the 18th-Century Tawstock Castle in North Devon, which has its own helipad, 8.41 acres of private, fenced grounds, castellated battlements and a King Arthur round table. Click here to view the castle on Rightmove.
The property is in council tax band H but as it is for sale with a guide price of £1,350,000 it is unlikely to be impacted by the mansion tax.
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 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.
For example, if you sell a £2 million property to avoid the mansion tax and want to buy a £1.5 million property instead, your stamp duty bill will be £93,750.
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 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.”
Paula Higgins, CEO of HomeOwners Alliance, said:
“Its 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. We’re sceptical about whether the revaluation needed for this mansion tax can be delivered cleanly and on time.
“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 up and down the country started to worry this autumn when Chancellor Rachel Reeves left open the idea of higher property taxes at the Labour Party Conference on 29 September.
But the following policies have not come to fruition:
November 24, 2025
November 20, 2025
October 30, 2025
October 20, 2025 
