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A New Charge on Homes Over £2 Million: What Is the High Value Council Tax Surcharge (2028)?

From April 2028, owners of homes in England worth £2 million or more will pay an annual surcharge of £2,500 to £7,500. The bands, who pays, and what it means for prime London buyers.

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The new charge announced in the November 2025 Budget, and dubbed the "mansion tax" by the press, is now set out officially. From April 2028, owners of homes in England worth £2 million or more at 2026 values will pay a fixed annual amount on top of ordinary council tax. It is called the High Value Council Tax Surcharge.

For an investor looking at Knightsbridge, Mayfair, Belgravia, Chelsea or Kensington, it is now an annual cost to factor into the purchase decision.

Bands and annual amounts

| 2026 value | Annual surcharge | |---|---| | £2,000,000 – £2,500,000 | £2,500 | | £2,500,000 – £3,500,000 | £3,500 | | £3,500,000 – £5,000,000 | £5,000 | | £5,000,000 and above | £7,500 |

Source: GOV.UK, High Value Council Tax Surcharge.

The amounts will rise each year in line with CPI inflation from 2029-30.

Who pays?

GOV.UK is clear: the liability falls on the owner, not the occupier. Ordinary council tax is usually paid by whoever lives in the home. This surcharge is paid by the owner even when the property is let. Existing council tax continues unchanged, so this is an additional charge, not a replacement.

The information published on GOV.UK does not set out an exemption for owners living abroad. The charge applies only to homes in England. Social housing is out of scope.

How will value be set?

The Valuation Office Agency (part of HMRC) will run a targeted valuation exercise to identify properties in scope. The reference point is 2026 value. Revaluations will take place every five years; according to the government statement reported by Estate Agent Today, the next is in 2033. New homes completed after April 2028 will be banded on completion or when first occupied. Significantly improved homes will be revalued at the next revaluation or on sale, whichever comes first.

Details such as appeals and payment deferral have not yet been confirmed in the official texts. We will update this article when they are.

Are the amounts significant?

Relative to value, they are small. On a £3 million home, £3,500 a year is about 0.12% of value. But that is not the right question. The right question is how this charge adds to holding costs that are already high:

  • On purchase: a non-UK resident buyer who already owns another home pays £483,750 SDLT on a £3 million property. The working is in our Stamp Duty guide.
  • If held through a company: a dwelling worth £2 million to £5 million attracts £32,200 ATED for 2026-27.
  • From 2028: this new surcharge comes on top.

What should prime London buyers do?

Our view: on properties just above the £2 million threshold, negotiating power may shift towards the buyer, because the annual cost should be reflected in the seller's pricing. Demand may rise for properties just below the threshold. This is our assessment, not something market data has yet confirmed.

In practice:

  1. Estimate the band before you offer. If it is unclear which band a property will fall into at 2026 value, model the worst case.
  2. See holding costs in one table. Council tax, the surcharge, service charge, insurance and, where relevant, ATED.
  3. Do not neglect estate planning. UK property is within UK inheritance tax wherever the owner lives. See our inheritance tax (IHT) guide.

If you are considering a purchase in a prime area, our Knightsbridge, Mayfair and Belgravia guide is a good starting point. For a total cost model on a specific property, our Buying Agent team can prepare one.

Sources

This article is for general information only and is not tax advice. Information is correct as of 17 October 2026.

Expert Q&A

Frequently Asked Questions

When does the High Value Council Tax Surcharge start?
In April 2028. It will apply to homes in England with a 2026 value of £2 million or more.
How much is the annual charge?
£2,500, £3,500, £5,000 or £7,500 depending on the band. The amounts will rise each year in line with CPI from 2029-30.
If the home is let, does the tenant pay?
No. According to GOV.UK, the owner is liable. The tenant continues to pay ordinary council tax.
Does it apply outside London?
Yes, across England. Scotland, Wales and Northern Ireland are not covered.
How will I know my property's value?
The Valuation Office Agency will identify properties in scope through a targeted valuation exercise. Details such as the appeals process have not yet been announced. ---

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