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High Value Council Tax Surcharge: A Practical Guide for Property Owners in England

Key Takeaways

  • The High Value Council Tax Surcharge applies to homes in England valued above £2 million using 2026 valuations.
  • There are four surcharge bands ranging from £2,500 to £7,500 a year, rising with CPI from 2029–30.
  • Local authorities will administer the billing and collection of the surcharge on behalf of the central government, with revenue ring-fenced for local services.
  • The Valuation Office Agency will identify properties above the threshold and revalue them every five years.
  • Social housing is excluded, and further details will be consulted on in early 2026.

The High Value Council Tax Surcharge (HVCTS), referred to by some as the ‘mansion tax’, is a new measure introduced in the latest budget by Chancellor of the Exchequer Rachel Reeves that will affect the owners of high-value homes in England. It applies from April 2028 and will affect residential properties valued above £2 million using 2026 market prices. The surcharge works alongside the existing Council Tax framework but is a separate fixed charge applied to qualifying properties. Local authorities will administer the billing and collection of the surcharge on behalf of the central government, with all revenue ring-fenced for local services and distributed back to local authorities through the local government finance settlement.

Property owners, landlords, and investors with dwellings above the £2 million threshold will need to understand how the surcharge works and how future indexation and revaluation cycles may affect long-term costs.

What is the High Value Council Tax Surcharge, and who will be affected?

The surcharge is an annual charge applied to residential properties in England with a 2026 valuation above £2 million. It does not use existing Council Tax bands; it introduces its own value-based bands with fixed annual amounts.

Anyone who owns a qualifying residential property in England valued above the £2 million threshold in 2026 will fall within the surcharge. This includes homeowners, landlords, trusts, and overseas owners. Properties held through companies or other structures are included unless future exemptions are confirmed following the 2026 consultation.

The system applies regardless of use, so main homes, second homes, and high-value rental properties will all be included.

How Will Properties Be Valued For HVCTS?

The Valuation Office Agency will carry out valuations to determine the 2026 market value of relevant properties. This valuation forms the basis for the surcharge from its introduction in 2028. Revaluations will then take place every five years. Between cycles, the 2026 valuation will continue to apply unless substantial structural works justify reassessment.

Homeowners may challenge valuations using the standard Council Tax challenge route if they believe the valuation is incorrect.

How Is HVCTS Calculated?

The surcharge uses four fixed-value bands, based on 2026 market valuations, as follows:

Threshold (£m)Rate (£)
£2.0-2.5£2,500
£2.5-3.5£3,500
£3.5-5.0£5,000
£5+£7,500

From 2029 to 30 onwards, these amounts will increase each year in line with CPI inflation. The surcharge is added on top of the standard Council Tax bill. Existing Council Tax discounts and exemptions do not reduce the surcharge, including single-person discounts, second home discounts, empty property exemptions, and local discretionary reductions.

Local authorities will administer the billing and collection of the surcharge on behalf of the central government. Although collected centrally, the revenue is ring-fenced for local services and returned to local authorities through the local government finance settlement.

There is no requirement for property owners to file new returns or provide information to HMRC. Payment schedules and enforcement will follow the standard Council Tax structure.

What Is The Impact on Homeowners of HVCTS?

Homeowners with properties above £2 million will need to plan for an ongoing annual cost that increases with inflation from 2029 – 30. Landlords and investors with high-value rental properties will need to factor the surcharge into yield calculations and long-term portfolio planning. The four-band structure, combined with CPI indexation, will influence overall returns and may prompt investors to reassess holdings near valuation thresholds. Overseas investors will also need to account for the recurring charge when assessing the long-term cost of owning high-value property in England.

How Can Residential Home Owners Plan for HVCTS?

Property owners can begin preparing for HVCTS by:

  • Reviewing whether their property is likely to exceed the relevant 2026 valuation thresholds
  • Considering how future improvements may affect revaluations
  • Factoring the surcharge and future CPI increases into long-term budgets
  • Monitoring consultation outcomes in 2026, especially regarding possible support schemes or exemptions for complex ownership structures

A public consultation in early 2026 will consider detailed rules, including potential reliefs, support arrangements, and adjustments for specific ownership situations.

Final words

The High Value Council Tax Surcharge is a significant new measure for owners of high-value homes in England. With fixed annual charges, CPI indexation from 2029 – 30, a 2026 valuation base, and five-year revaluation cycles, the surcharge introduces ongoing costs that homeowners, landlords, and investors will need to plan for. Understanding the valuation rules, billing arrangements, and consultation timeline will help owners prepare ahead of the 2028 launch.

FAQs About the High Value Council Tax Surcharge

Does the surcharge replace Council Tax?

No, it is a separate fixed charge applied to qualifying high-value homes.

Will the High Value Council Tax Surcharge apply throughout the UK?

No, it applies only to properties in England.

Do homeowners need to file any forms?

No, local authorities will administer billing and collection through the existing Council Tax infrastructure.

How will properties be valued for the High Value Council Tax Surcharge

The Valuation Office Agency will assess 2026 values, which will apply for five years. Owners can challenge valuations through standard Council Tax procedures.

Will discounts apply to the High Value Council Tax Surcharge?

No, existing Council Tax discounts and exemptions do not reduce the surcharge. A support scheme will be established for those who may find it difficult to meet the charge. The Government intends to focus support on those who need it most, with the design and eligibility criteria forming a key part of the early 2026 consultation.