Mansion tax: what the £2m council tax surcharge will cost you

The mansion tax is a yearly surcharge on homes in England worth £2 million or more

The "mansion tax" is the popular name for the High Value Council Tax Surcharge (HVCTS), a new annual charge on owners of residential property in England worth £2 million or more. It was announced at Budget 2025 on 26 November 2025 and takes effect in April 2028.

According to the GOV.UK factsheet published with the Budget, owners "will continue to pay their existing Council Tax alongside the surcharge". So the surcharge is a second line on top of your Council Tax bill, not a replacement for it. Local councils will collect it on behalf of central government, and the government expects it to raise about £430 million a year from 2028/29 to support funding for local services.

Fewer than 1% of homes in England are expected to be in scope. The Valuation Office, part of HMRC, will value them at their 2026 value, not at the 1991 values used for Council Tax bands.

You can see what you pay now with the Council Tax calculator, which gives your 2026/27 bill by council and band. Add the surcharge band below to see your likely total from 2028.

Mansion tax bands: £2,500 to £7,500 a year

The mansion tax has 4 bands, each with a flat annual charge. According to HM Treasury's HVCTS factsheet of 26 November 2025, the charges are:

The charge is a flat amount per band, not a percentage of value. A home valued at £2.49 million pays the same £2,500 as one valued at exactly £2 million, and a home valued just over £2.5 million pays £3,500. At the top, a £5.1 million house and a £50 million house both pay £7,500.

The charges rise with Consumer Prices Index (CPI) inflation each year from 2029-30. The value thresholds themselves are not indexed: the consultation says decisions on uprating the bands will be taken alongside revaluations, the first of which is in 2033.

What is confirmed and what is still only proposed

The mansion tax thresholds, charges, start date and the rule that owners pay were set out at Budget 2025 and are government policy. The detail of who can defer, which homes are exempt and how appeals work was put out for consultation from 19 May to 14 July 2026, and those parts can still change.

On 28 September 2026 the GOV.UK consultation page still showed the consultation as closed with no published outcome, and the consultation says the government will legislate for parts of the scheme, such as the new penalty powers for councils.

Owners pay the mansion tax, not the people living in the home

The mansion tax is charged to the legal owner of the property, which is the main difference from Council Tax, where the occupier usually pays. According to the consultation, joint owners are jointly and severally liable, and a company that owns a home pays the charge itself.

The consultation proposes these rules for other ownership types:

• Leasehold flats and houses: the leaseholder pays if the lease was first granted for more than 21 years. For shorter leases, the freeholder pays.
• Trusts: the trustees pay, including for bare trusts, even though a beneficiary may have the right to the property.
• Rented homes: the landlord pays, because the surcharge follows ownership. A tenant in a £3 million house keeps paying the Council Tax, and the landlord receives the £3,500 surcharge bill.
• Second homes: they are in scope in the same way as a main home, and the proposed deferral scheme would not cover them.

The government says over 90% of homes worth £2 million or more were owner occupied in 2024, citing its Market Value Survey, so for most households the Council Tax payer and the surcharge payer will be the same person.

How the Valuation Office will value homes for the mansion tax

The Valuation Office (VO) will decide which homes are worth £2 million or more at 2026 values and place each one in a band. According to Annex B of the consultation, it will use the comparable method, looking at sale prices of similar homes and adjusting for differences, which is the same method used for Council Tax.

Most valuations will be model assisted. The VO will use an automated valuation model to find likely homes and give a first estimate, and professional valuers will review each decision. Data sources include the VO's own property records, Stamp Duty Land Tax data, council planning documents and mapping data. The VO may write to owners to confirm details such as the number of rooms; the consultation does not propose routine home inspections.

The timetable in the consultation is:

1. Late 2027: the VO publishes a draft list of homes in scope, and owners can ask for factual errors to be corrected without a formal challenge.
2. March 2028: councils send the first bills to liable owners.
3. April 2028: the surcharge takes effect, collected over 12 monthly instalments by default, or 10 on request.
4. 2033: the first revaluation.

Between revaluations, a home's band does not change because of improvements alone. A large extension is picked up at the next revaluation or when the home is sold, whichever comes first.

The mansion tax ignores your Council Tax band, including Band H

Your Council Tax band does not decide if you pay the mansion tax. According to a GOV.UK news story of 28 November 2025, "bands F, G and H will not be used to determine eligibility for the surcharge", and a change in your Council Tax band will not change your surcharge.

This matters because Council Tax bands in England still use values from 1 April 1991. Band H covers homes worth more than £320,000 in 1991, Band G £160,001 to £320,000 and Band F £120,001 to £160,000. A home that was in Band G in 1991 can be worth well over £2 million today and would be caught by the surcharge; a Band H home worth £1.8 million in 2026 would not.

The two systems run side by side. Council Tax is still set by your council from your band and its Band D rate, and the surcharge is added on top. If you think your 1991 band is wrong, that is a separate challenge to the Valuation Office, explained in what to do if your Council Tax band is wrong. A successful band challenge lowers Council Tax but does not touch the surcharge.

Worked example: a £2.4 million home in Camden

A £2.4 million house in Camden would pay about £6,915 a year in Council Tax and mansion tax combined, using today's Council Tax. The house is in Band H for Council Tax and in the first surcharge band (£2 million to £2.5 million).

• Camden's 2026/27 Band D charge, including the Greater London Authority precept, is £2,207.55 (MHCLG Council Tax levels 2026 to 2027, Table 9).
• Band H is 18/9 of Band D, so Band H is £2,207.55 × 2 = £4,415.10.
• The surcharge for a £2.4 million home is £2,500.
• The total is £4,415.10 + £2,500 = £6,915.10, or about £576 a month over 12 instalments.

The same £2.4 million home would pay very different totals in other boroughs, because the Council Tax part varies while the surcharge does not:

The Band H figures come from the Council Tax calculator with country England, band H and two adults, and match the Camden Council Tax page. Council Tax will rise before 2028, so the 2028/29 total will be higher than this. A single owner-occupier would get the 25% single person discount on the Council Tax part only; the consultation says Council Tax discounts will not be copied across to the surcharge.

Mansion tax deferral: who could delay paying

The government will offer a deferral scheme that lets some owners delay paying the mansion tax until the home is sold or changes hands. The consultation proposes that deferral is available only for your main home, not second homes or company-owned property, and only if you meet one of these tests:

• annual household income of £35,000 or less, or
• capital savings of £16,000 or less, or
• someone in the household meets disability criteria taken from Council Tax, such as the severe mental impairment rules or the disabled band reduction scheme.

The consultation asked whether owners should need to pass the income test or the savings test, or both, so that point is open. Deferred amounts would build up with interest, and the council would take a charge on the property so the debt is paid on sale. The interest options in the consultation were the HMRC official rate or Bank of England base rate (both 3.75% when it was published) or the 4.75% rate used for care home deferred payment agreements.

Deferral is not a discount. A qualifying owner of a £3 million home who defers for 10 years would owe at least £35,000 in surcharges, before CPI rises and interest, when the home is sold. Council Tax Reduction and other Council Tax discounts will not apply to the surcharge.

Homes the government proposes to exempt or discount

The consultation lists property types that would be exempt from the mansion tax or get a discount of up to 100%:

• purpose-built student halls of residence;
• Ministry of Defence housing for the armed forces, and homes owned by foreign states for diplomats;
• homes owned by registered social housing providers (confirmed at Budget 2025 as out of scope);
• care homes, hospices and long-stay hospital accommodation;
• refuges for people escaping domestic violence;
• new builds held by the developer, until first sale or 12 months after completion, whichever is sooner.

The government asked for views on two more groups: tied property, such as a farmhouse a farmer must live in to run the farm, and homes owned by charities for people in need. Neither has a confirmed discount yet.

Commercial property is outside the surcharge because it applies only to dwellings, as defined for Council Tax by the Local Government Finance Act 1992. A mixed-use building is in scope only for a self-contained residential part, valued on its own.

How to challenge a mansion tax band

You will be able to challenge your mansion tax band with the Valuation Office and then appeal to the Valuation Tribunal for England. The consultation proposes these time limits:

You keep paying while a challenge runs, and overpayments are refunded if the band changes. Estate agent estimates and property website valuations would not count as evidence; sales of similar homes around 2026 would. If a council sends an owner a notice asking who is liable and it is ignored, the proposed penalty is 10% of the annual surcharge after 21 days, rising to 30% after a further 21 days.

The mansion tax does not apply in Scotland or Wales

The High Value Council Tax Surcharge covers England only; the consultation states that the proposals "relate to England only". Scotland and Wales run their own Council Tax systems and have their own plans.

Scotland is adding two new Council Tax bands from 1 April 2028, subject to the Scottish Parliament. According to the Scottish Government's consultation of 6 July 2026, Band I will cover homes worth over £1 million and up to £2 million, and Band J homes over £2 million, both at 1 April 2026 values. Its illustrative rates would add about £720 a year (Band I) and £3,600 a year (Band J) to the average Band H bill. Those rates are not final: the consultation closed on 24 August 2026, and the multipliers will be set in legislation. Unlike the English surcharge, Scottish Band I and J are ordinary Council Tax, paid by the occupier, with the usual discounts.

Wales has no surcharge. It already has 9 bands, A to I, and the Local Government Finance (Wales) Act 2024 provides for revaluations every 5 years starting in 2028, according to the Welsh Government.

What to do now if your home may be worth £2 million

The mansion tax will not be billed until March 2028, so the first step is to work out your likely band and total cost. Check what similar homes near you sold for in 2025 and 2026 on HM Land Registry's price paid data, because 2026 values decide the band.

1. Find your Council Tax band and bill on the Council Tax by council pages, then add the surcharge band that matches your estimate.
2. If your value sits near £2 million, £2.5 million, £3.5 million or £5 million, keep sales evidence for comparable homes. It is the evidence the consultation says the VO will accept.
3. Check the draft list when the VO publishes it in late 2027 and correct any wrong details, such as floor area or bedrooms, before bills go out.
4. If you might need to defer, keep records of household income and savings; the proposed tests are £35,000 and £16,000.
5. If you are buying a home over £2 million, add the surcharge to your running costs and work out the purchase tax with the Stamp Duty calculator. The Budget 2025 factsheet and the consultation make no change to Stamp Duty Land Tax.