High Value Council Tax Surcharge: What the New Mansion Tax Consultation Means for Property Owners
If you own a residential property in England worth £2 million or more, you may face a new annual charge from April 2028. The measure is officially called the High Value Council Tax Surcharge, but it is widely being referred to as a mansion tax.
The surcharge was announced in the 2025 Budget and the government opened an 8-week consultation on 19 May 2026, running until 14 July 2026. The charge is expected to apply to owners, not tenants or occupiers, and affected homes will be valued using 2026 property values.
For owners, landlords and investors with high-value homes, now is the time to understand the proposed rules and plan ahead.
What the surcharge is and why it exists
The High Value Council Tax Surcharge is a new annual levy on top of existing council tax. It applies to residential properties in England valued at £2 million or more.
The government’s argument is based on fairness. The current council tax system still uses 1991 property values, which can mean some very high-value homes pay less council tax than lower-value homes elsewhere in England.
The surcharge is expected to affect fewer than 1% of homes in England and raise around £430 million a year from 2028/29. Local authorities will collect it alongside council tax, but the revenue will be collected on behalf of central government to support funding for local government services.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
If you own high-value property and want to understand your exposure, working with specialist property tax accountants is a sensible first step.
How much you may pay
The proposed surcharge has 4 bands:
| Property value | Annual surcharge |
|---|---|
| £2 million to £2.5 million | £2,500 |
| £2.5 million to £3.5 million | £3,500 |
| £3.5 million to £5 million | £5,000 |
| Over £5 million | £7,500 |
Charges will rise in line with Consumer Prices Index inflation from 2029/30 onwards.
For landlords and investors with several qualifying properties, this recurring cost could become a meaningful cash flow issue. Our team works as a dedicated property tax advisor for these situations, and our tax planning for property investors guide covers the wider strategy.
Who has to pay
The surcharge is expected to fall on the legal owner of the property. That can include freeholders, long leaseholders, companies, trustees and joint owners.
For rental properties, this means the landlord is expected to be liable, not the tenant. Where there are joint owners, liability is expected to be joint and several. Where a company owns the property, the company is expected to be liable.
The consultation is still considering detailed rules for companies, trusts, partnerships, funds, long leaseholders and more complex ownership structures. If your property is held through a company, trust or mixed structure, our accountants for landlords and commercial property accountant teams can help you understand where the liability may sit.
How properties will be valued
The Valuation Office will carry out a targeted valuation exercise to identify properties worth £2 million or more in 2026 values. Properties will then be placed into 1 of the 4 surcharge bands.
Revaluations are expected every 5 years, with the next one due in 2033. Newly built homes after April 2028 may be valued when completed or occupied. Properties that are significantly improved or changed may be reassessed at the next revaluation or when sold, whichever comes first.
High-value homes can be difficult to value because comparable sales evidence may be limited. Keeping clear records of property value, improvements and ownership history will help if you need to challenge a banding. Our landlord accountants explained piece explains why good record keeping matters for property owners.
What the consultation is asking
The consultation is seeking views on:
- How “owner” should be defined
- Support for owners who cannot pay immediately
- Reliefs, exemptions and discounts
- How billing should work
- How owners can challenge valuations or liability
- Enforcement mechanisms
- Treatment of companies, trusts, partnerships and funds
- Whether non-UK resident owners should face an additional premium
The proposed support mechanism includes a deferral scheme for eligible main residence owners who may struggle to pay, with suggested income and savings thresholds. Deferral is not proposed for second homes or company-owned properties.
If you want to understand the wider tax landscape these changes sit within, our UK Spring Budget 2026 summary is a useful companion read.
How it might affect property values
Recurring property taxes can affect buyer behaviour. Properties just above a surcharge threshold may become more sensitive to pricing, especially around the £2 million, £2.5 million, £3.5 million and £5 million boundaries.
The Office for Budget Responsibility expects some behavioural response, including price adjustment and bunching below band thresholds. For owners thinking about selling, buying or restructuring, this should be part of the planning conversation.
If you are weighing up ownership structure, our guides on SPV versus personal ownership and sole trader versus limited company are worth reviewing.
What property owners should do now
There is time before April 2028, but early planning will help.
Practical steps include:
- Estimate whether your property may fall above the £2 million threshold
- Keep records of property improvements and valuations
- Build the recurring annual charge into your cash flow forecast
- Review how your properties are owned
- Watch the consultation outcome for confirmed reliefs and exemptions
- Keep accurate portfolio accounts
Our landlord cash flow mastery post explains how to plan for recurring costs, and our year end checklist for property portfolios gives a useful framework.
For landlords managing larger portfolios, our accounting property management service keeps the numbers organised, while our property tax accounting specialists handle the planning side. If you would rather outsource the admin, our bookkeeping Nottingham team and outsourced finance services can help.
Wider property tax changes to keep in mind
The surcharge does not sit in isolation. From April 2027, separate property income tax rates are due to apply at 22%, 42% and 47% for basic, higher and additional property income rates. For individual landlords, this increases the importance of joined-up planning.
Our guides on Section 24 and mortgage interest, SDLT for landlords and capital allowances on property cover key moving parts, and our experienced accountant for landlords team ties it together.
Frequently asked questions
When does the mansion tax start?
The High Value Council Tax Surcharge is due to start in April 2028, based on 2026 property values.
Who pays the surcharge?
The owner is expected to pay. For rental properties, that means the landlord, not the tenant.
How much will I pay?
The annual charge is expected to range from £2,500 to £7,500, depending on the property’s value band.
Will company-owned properties be caught?
Yes, company-owned properties are expected to be within scope unless a specific exemption or discount applies after consultation.
Can I challenge the valuation?
Yes. The consultation sets out a proposed challenge and appeal process, including appeals to the Valuation Tribunal for England.
How often will properties be revalued?
Every 5 years, with the next revaluation expected in 2033.
Ready to plan ahead for the High Value Council Tax Surcharge?
The surcharge is still being finalised, but the direction is clear. Owners of high-value residential property should start reviewing valuations, ownership structures and cash flow well before April 2028.
Our team helps property owners, landlords and investors across Nottingham and nationwide stay ahead of tax changes with clear, practical advice.
Call us on 0115 648 8686 or get in touch through our website to book a free, no-obligation conversation about your property tax position.
I lead FHP Accounting, an accountancy practice specialising in Commercial and Residential Property Accounting. Our goal is to make the administration of running property portfolios easier for landlords, managers, and investors — allowing you to focus on what you do best, while we take care of everything behind the scenes.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
