Homeowners across London, Surrey, Richmond, and other high-value areas have been hearing about a new “mansion tax” since the 2025 Budget. Headlines make it sound dramatic: “steep new property charges,” “Richmond residents hit,” or “pay more on top of council tax.” The reality is less sensational but still important. If your property is worth £2 million or more, you need to understand what’s coming — how the surcharge works, who pays, and how much it might add to your annual bills.
This guide explains everything in plain, practical terms, drawing on 2025 government announcements, expert analysis, and real-world examples. By the end, you’ll know whether the new council tax mansion tax affects you, what steps to take, and how to plan.
What Is the “Council Tax Mansion Tax”?
The Short Version
The so-called “mansion tax” is officially a surcharge on high-value property added to the existing council tax. It:
- Applies to properties valued at £2 million or more.
- It is an annual payment due from the property owner, not the tenant.
- Begins April 2028, although valuations start earlier.
- It is tiered — the more expensive your property, the higher the surcharge.
Why the Government Introduced It
The main goal is fairness. Council tax in England is still largely based on 1991 property values, which means many high-value homes historically paid very little compared with their current market price. The surcharge corrects this, generating extra revenue for local councils without overhauling the entire council tax system.
Is the Mansion Tax on Top of Council Tax?
Yes — it is an additional charge, not a replacement.
- Your existing council tax remains.
- The surcharge is billed separately.
- It only applies to owners of £2m+ properties.
Here’s a practical illustration:
| Property Value | Standard Council Tax | Mansion Tax | Total Annual Cost |
| £2.1m | £3,500 | £2,500 | £6,000 |
| £3.2m | £3,800 | £3,500 | £7,300 |
| £4.5m | £4,000 | £5,000 | £9,000 |
| £5.5m | £4,200 | £7,500 | £11,700 |
Tip: Many homeowners confuse this with general council tax hikes — it’s specifically tied to high-value homes.
How the Mansion Tax Works: 2025–2028 Timeline
A clear timeline helps you see what’s coming:
| Year | Event | What Homeowners Should Do |
| 2025 | Budget announcement | Check if your property is near the £2m threshold |
| 2026 | National revaluation | Review valuation notices; gather sale comparables |
| 2027 | Pilot billing | Verify charges, submit appeals if necessary |
| 2028 | First bills issued | Plan payment or deferral |
Note: Many properties may move above or below the £2m line after revaluation. Keep an eye on local sales and valuations.
How Homes Will Be Valued for the Mansion Tax
Valuation is the trickiest part. Here’s what you need to know:
- The government will use market sales data and local price trends, supported by VOA mass-assessment tools.
- Homes with limited sale history or unique characteristics may see estimated valuations.
- You can appeal valuations if your home appears overvalued.
Steps to Challenge a Valuation
- Check the provisional valuation notice.
- Compare with recent local sales.
- Submit evidence to your local authority.
- Await confirmation or revised valuation.
This is especially important for long-term homeowners who may not have sold recently, as 1991-based estimates could differ significantly from today’s market.
If your property is empty, you might still have to pay council tax. To understand when this applies and whether you can get any exemptions or discounts, check out our detailed guide on council tax for empty properties.
Who Will Pay the Mansion Tax?
Primary rule: The property owner pays, regardless of occupancy. This includes:
- Main homes
- Second homes
- Vacant properties
- Company-owned properties
Landlords
While landlords pay the surcharge, they often pass costs onto tenants through rent. In expensive areas, this could slightly inflate rents for tenants in high-end properties.
Asset-Rich, Cash-Poor Owners
Some older homeowners may own properties worth over £2m but have limited disposable income. The government is considering deferral schemes, where the tax can be deferred until sale or death, though details are not finalized.
Example: A retired couple in Richmond with a £2.4m home may defer payment until they sell, avoiding cash flow issues while still complying with the law.
Mansion Tax Bands & Costs (2028 Rates)
| Property Value | Annual Surcharge | Notes |
| £2.0–2.5m | £2,500 | Entry threshold |
| £2.5–3.5m | £3,500 | Mid-tier homes |
| £3.5–5m | £5,000 | High luxury |
| £5m+ | £7,500 | Premium bracket |
Tip: If your property sits near a band edge, even small improvements or local price changes could push it into a higher tier.
Updated Example: Council Tax + Mansion Tax
| Property Value | Standard Council Tax | Mansion Tax | Total Annual Cost |
| £2.1m | £3,500 | £2,500 | £6,000 |
| £3.2m | £3,800 | £3,500 | £7,300 |
| £4.5m | £4,000 | £5,000 | £9,000 |
| £5.5m | £4,200 | £7,500 | £11,700 |
Will This Affect House Prices?
Early analysis suggests:
- Homes near £2m may cluster just below the threshold to avoid surcharge.
- High-end properties could take longer to sell or require price adjustments.
- Developers may shift focus toward slightly lower-value properties.
Regional Differences
- London: Highest exposure, especially in central boroughs.
- Surrey, Oxford, Cambridge: Moderate exposure.
- Other regions: Minimal impact.
These trends are speculative but based on historical market reactions to similar policy changes.
Common Mistakes Homeowners Make
- Thinking the surcharge starts immediately — first bills are 2028.
- Assuming your Zoopla estimate matches the government valuation.
- Believing tenants pay the surcharge.
- Ignoring the revaluation process — properties can move above £2m unexpectedly.
- Missing the deadline for valuation appeals.
Checklist: What To Do If Your Home Is Near £2 Million
- Obtain a recent valuation (estate agent or VOA tools).
- Track local property sales to anticipate potential changes.
- Review renovation plans — some improvements may increase valuation.
- Discuss financial planning with an accountant.
- Consider timing a sale between 2026–2028 if planning to move.
Future Outlook: Could the Threshold Change After 2028?
- Inflation could push more homes over the £2m line.
- Political pressure may increase thresholds or alter bands.
- Other UK regions may implement similar surcharges in the coming years.
FAQs
Q1: Is the mansion tax added on top of council tax?
Yes. The council tax mansion tax is an additional annual charge applied on top of your existing council tax band. Homeowners with properties valued at £2 million or more will pay this surcharge alongside their normal council tax, not instead of it.
Q2: Who pays the new mansion tax?
The property owner is responsible for the mansion tax. Tenants do not pay this charge. It applies to all high-value homes in England worth £2m or more, including main residences, second homes, and vacant properties.
Q3: When does the mansion tax start?
The first bills for the high-value property surcharge will be issued in April 2028. Valuations to determine eligibility will begin earlier, in 2026, giving homeowners time to review their property’s value and plan ahead.
Q4: How will homes be valued for the mansion tax?
Valuations are based on market sales data, local property prices, and VOA modelling. The Valuation Office Agency will issue notices, and homeowners can appeal if the valuation seems inaccurate to ensure they are not overcharged.
Q5: Will the mansion tax affect house prices?
Yes, especially in the £2m–£4m range. Buyers may negotiate harder, and sellers might adjust prices to avoid higher bands. In some areas, property sales could slow slightly as the surcharge influences market behavior.
Q6: Do second homes pay the mansion tax?
Yes. The surcharge applies to all properties valued at £2m+, whether they are your main home, a second home, or a vacant property. Social housing is exempt, but any high-value private property falls under the charge.
Q7: Can the mansion tax be deferred?
Possibly. The government is considering deferral options for asset-rich but cash-poor homeowners, allowing payment to be delayed until sale or inheritance. Final guidance on deferral schemes is still pending.
Conclusion
The council tax mansion tax represents a significant change for high-value property owners. Key takeaways:
- It is added on top of the existing council tax, not a replacement.
- Applies to £2m+ properties, with tiered charges.
- First bills start in 2028, but valuation begins earlier.
- Owners, not tenants, are responsible.
- Early preparation — valuations, appeals, financial planning — can save stress and cost.
Understanding this now allows you to plan, avoid mistakes, and take action proactively.
Related: Council Tax on Unoccupied Property in 2025: What Homeowners Should Know
