Mansion Tax (High Value Council Tax Surcharge): 2026 Guide

What the mansion tax is

The charge was introduced as part of the Autumn Budget statement delivered by the then Chancellor on 26 November 2025. Its official name is the High Value Council Tax Surcharge, although it is commonly referred to as the mansion tax in public debate and in the press.

The surcharge operates alongside the existing council tax system. Homeowners who are liable will pay the additional amount in addition to their standard council tax bill. The funds collected from the surcharge are paid to the Treasury, meaning they form part of central government revenue rather than being retained by local authorities.

The policy is designed to raise revenue from the most expensive residential properties in England. The government has stated that the measure will affect a small proportion of the housing stock, with the threshold set at 2 million pounds based on property values as assessed in 2026.

How much it costs and who pays

There are four annual bands from April 2028: 2,500 pounds for homes worth 2 million to 2.5 million pounds, 3,500 pounds up to 3.5 million pounds, 5,000 pounds up to 5 million pounds, and 7,500 pounds for homes worth more than 5 million pounds. The charge is paid by the owner of the property, not the occupier, so landlords of high value homes are liable rather than their tenants.

The charge is structured in four bands. The lowest band applies to homes valued between 2 million and 2.5 million pounds, with an annual charge of 2,500 pounds. The next band covers properties worth more than 2.5 million pounds and up to 3.5 million pounds, with a charge of 3,500 pounds per year. The third band applies to homes valued above 3.5 million pounds and up to 5 million pounds, attracting an annual charge of 5,000 pounds. The highest band is for properties worth more than 5 million pounds, which incur a charge of 7,500 pounds each year.

Liability for the surcharge falls on the owner of the property rather than the person living in it. This means that landlords who own high value rental properties are responsible for paying the charge, not their tenants. Owner occupiers are also liable for their own homes.

The surcharge is payable on top of the existing council tax bill. The government has said that the charge will rise each year in line with inflation, although the exact mechanism for uprating has not yet been confirmed in secondary legislation.

HMRC valuations: what is happening now

To identify which homes cross the 2 million pound threshold, HMRC and the Valuation Office Agency have begun a targeted valuation exercise, focusing on higher council tax bands F, G and H. Valuation agents can request access to assess a property, and homeowners in scope may be contacted about a valuation. Values are based on 2026 levels and the government has said properties will be reassessed every five years.

HMRC and the Valuation Office Agency have started a valuation exercise to determine which properties fall within the scope of the surcharge. The exercise is targeted at homes in the higher council tax bands, specifically bands F, G and H, where the most expensive properties are concentrated.

The Valuation Office Agency is responsible for assessing property values for council tax purposes. For the mansion tax, the agency will carry out valuations based on 2026 price levels. Valuation agents may request access to a property to carry out an assessment, and homeowners whose properties are in scope may be contacted about arranging a valuation visit.

The government has confirmed that property values will be reassessed every five years. This means that the valuation used for the surcharge will be updated periodically to reflect changes in the property market. The initial valuations are being based on 2026 levels, as set out in the Budget documentation published by HM Treasury.

Who is affected

The government says the surcharge will apply to fewer than the top 1 percent of homes, estimated at around 145,000 properties, concentrated in London and the South East. Because liability is based on property value rather than income, critics have highlighted asset rich but cash poor owners, such as long standing residents and pensioners, as most exposed.

The government estimates that around 145,000 properties in England will be affected by the surcharge. This represents fewer than the top 1 percent of homes in the country. The properties are concentrated in London and the South East, where high value housing is most common.

Liability for the charge is determined solely by the value of the property, not by the income or wealth of the owner. Critics of the policy have pointed out that this could place a burden on owners who have lived in their homes for many years and have seen property prices rise, but who do not have significant cash income. Pensioners who are asset rich but cash poor have been cited as a group that could be particularly affected.

A worked example illustrates how the charge applies. An owner of a home valued at 2.2 million pounds would fall in the lowest band and pay 2,500 pounds a year from April 2028. This payment would be in addition to any council tax already due on the property.

Deferral and hardship options

The government ran a consultation, which ended in July 2026, mainly on how to help owners who would face financial hardship. The expected approach is to let those in hardship defer payment until the property is sold or on death, rather than removing the charge. Interest is likely to apply to any deferred amount.

The government launched a consultation on the design of the surcharge, with a particular focus on how to support owners who would face financial hardship in paying the charge. The consultation closed in July 2026.

The expected approach emerging from the consultation is to allow owners in hardship to defer payment of the surcharge until a later date. Deferral would typically last until the property is sold or until the death of the owner, at which point the deferred amount would become payable. The charge itself would not be waived or removed for those in hardship.

Interest is likely to accrue on any deferred amount. The exact rate of interest and the conditions for deferral have not yet been confirmed in final rules. Anyone who thinks they may be affected should check the final rules on GOV.UK as they are confirmed by the government.

How this fits the wider Budget property changes

The mansion tax is one of several property and wealth measures from the 2025 Budget and should not be confused with stamp duty or ordinary council tax banding. It sits alongside changes to capital gains tax and the taxation of property, savings and dividend income announced at the same time.

The High Value Council Tax Surcharge was announced as part of a wider set of property and wealth measures in the November 2025 Budget. It is a distinct charge and should not be confused with stamp duty, which is paid on the purchase of a property, or with the standard council tax bands that apply to all homes.

The Budget also included changes to capital gains tax and to the taxation of property, savings and dividend income. These measures were announced at the same time as the mansion tax and form part of the broader fiscal framework set out by HM Treasury.

For readers seeking the wider picture, the related guides on this site cover the other property and tax changes announced in the same Budget. The framework for all these measures was set out by HM Treasury in the Budget documentation published on 26 November 2025.

Frequently asked questions

What is the mansion tax?

It is the High Value Council Tax Surcharge, an annual charge on homes in England worth 2 million pounds or more, announced in the November 2025 Budget and applying from April 2028.

How much is the mansion tax?

From April 2028 it costs 2,500 pounds a year for homes worth 2 million to 2.5 million pounds, rising through 3,500 pounds and 5,000 pounds to 7,500 pounds for homes worth more than 5 million pounds.

When does the mansion tax start?

The surcharge applies from April 2028. HMRC and the Valuation Office have already begun assessing which homes cross the 2 million pound threshold, based on 2026 values.

Who pays the mansion tax?

The owner of the property is liable, not the occupier, so landlords of high value homes pay it rather than tenants. It is charged on top of the existing council tax bill.

Can I defer the mansion tax if I cannot afford it?

The government consulted, ending in July 2026, on letting owners in financial hardship defer payment until the property is sold or on death, with interest likely on any deferred amount. Check GOV.UK for the final rules.