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‘MANSION TAX’ & Council tax – future changes by HMRC
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‘MANSION TAX’ & Council tax – future changes by HMRC

Published 12th February
minute read

We know that some properties in London for example have a low Council Tax Rating despite the property being well above £2 million in value. But there are such houses owned by people who have been at their property for over 30yrs if not longer. It’s not their doing that property values have risen so much in the last few decades making their properties, in some cases, now worth more than £2m. 

So why should someone who is ‘asset rich’ but ‘cash poor’ have to pay a further tax on their home, a so called ‘Mansion Tax’? Are they expected to sell if they cannot afford the additional annual tax along with their new Council Tax rating? 

The Labour Government announced in the November Budget 2025 that it would bring a High Value Tax Bill Surcharge, also known as the 'mansion tax' from April 2028, where owners of properties valued at over £2million or more will be subject to an annual recurring charge in addition to their council tax cost. It has been muted the extra tax for a property valued at £2m will start from £2,500 per annum rising to £7,500 per annum at the top end.

HMRC Official said;

"We will be looking at open-source data from the Office for National Statistics and the Land Registry, sales data and stamp duty land tax data. We will be looking at those properties that are in the higher element current banding because of property data and then seeing how that translates to other data, matching the two and coming up with a valuation.

We have already done some work on that. He assured that the group will be contacting people about this work. Mr Russell said: "When we are doing the valuations, we will make sure that we are public about it. We will go out and tell people how we are doing the valuation and the criteria that we are using. At the end of the day, we want people to have confidence in the valuations that we produce. We do not want there to be appeals because that is in no one's interest. We want to make sure we are open, transparent and clear about the data that we are using, how we have applied it and how we have come to the valuation"

The government is looking at the valuation probably at the end of 2026, yet to be set because it requires legislation. Mr Russell told MPs that estimates suggest around 200,000 properties will fall within scope for the new charge. He explained that "a large number" of the properties will be located in London, the southeast, and the east of England, while some local authorities will have none whatsoever”.

The Official was asked whether a significant number of properties will have to be revalued to see whether they would reach the £2 million threshold.

"We will be looking at the ones in between those two levels to make sure we get the banding absolutely accurate. It is what we do. For example, every year we will value somewhere in the region of 200,000 houses that have been newly built. We do that anyway. Within that 200,000, there will be some houses that meet the criteria for the high-value council tax surcharge."

Regarding the question of how people can appeal the charge, he stated:

"On the appeals process, it is probably worth pointing out that the process for the high-value council tax surcharge will require legislation and consultation. I know there are plans to do the consultation in the next few months. That consultation will look at, for example, reliefs, appeals, how you might challenge your council tax banding, the scope and complex areas around ownership because the billing will not be on the occupier; it will be on the owner of the property. Again, there will be consultation around that. That will include how you might appeal it. Again, that has not been set out yet. That is still a work in process."

Equus Property comment: Thin end of the wedge! Thresholds are bound to change, they always do.

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