Rachel Reeves announced a new ‘mansion tax’ during today’s Budget.
Rachel Reeves has announced a rise in council tax to high-value homes (Image: Getty)
A new council tax map shows where in the UK will be hit by Rachel Reeves’ new hike. In today’s Budget, the Chancellor announced an increase in council tax for homes worth more than £2 million, also called a ‘mansion tax’.
Properties priced between £2 million and £2.5 million will see an annual surcharge of £2,500, going up to £7,500 for homes worth over £5 million. This is in addition to their regular council tax bill. Property values will not be based on the last purchase, but rather on new valuations carried out by the Valuation Office to reflect their value in 2026. Due to come into effect in April 2028, the new policy is estimated to hit around 140,000 homes. London will be hit worst, with 82% of recent sales of properties over £2 million taking place there. The Office for Budget Responsibility has said that the policy will raise £400 million for the Treasury by 2031. During her Budget speech, Reeves expressed the unfairness of the current system, saying that a band D home in Darlington, Country Durham, pays £300 more in council tax than a £10 million home in Mayfair, London.
Mansion Tax: Could your home be revalued?
Industry experts have expressed concern about the valuation process. Aneisha Beveridge, of estate agent Hamptons, said: “Valuing high-end homes accurately is notoriously difficult – around 30% of properties in England have not changed hands since Land Registry records began in 1995, making comparables scarce.
“This raises the risk of disputes and appeals, particularly where small differences in value could tip a property over the £2m threshold. Combined with the potential for a ‘cliff-edge’ effect, these valuation hurdles could create short-term uncertainty.”
There are also worries about how the new policy will impact pensioners who live in homes that have increased in value. The Telegraph found that areas with a high concentration of homes valued at £2 million also tend to have a high proportion of residents over 65.
Lucian Cook, head of residential research at Savills, said the change will also hit the owners of second homes. He said: “It is likely to have a disproportionate impact on second home markets which are already dealing with an increased stamp duty surcharge and the doubling of council tax.”
The Government has said there will be a consultation on the new policy, so details have not yet been confirmed. Where other bands will sit hasn’t been revealed.
While the regular council tax will go to local authorities, the surcharge will go to the central government. This tax will be charged on less than the top 1% of properties.
