Mansion tax – everything we know so far about the new charge

Owners of properties worth more than £2m could soon face a new charge on top of council tax, and 165,000 households are expected to be affected when the policy launches in April 2028.

The High Value Council Tax Surcharge (HVCTS) will apply to homes in England valued at over £2m, and according to Office for Budget Responsibility (OBR) data, the number of homes affected is expected to rise to 167,000 by 2030-31.

The HM Treasury has now launched a consultation on the new charge and has confirmed some details on how it will work. 

Here Which? looks at what’s been confirmed so far about the mansion tax, including whether you can challenge the charge and if there are any ways to avoid it.

What is the mansion tax – and how much will it be?

According to the government, less than 1% of properties will pay the high-value surcharge. 

However, homeowners in London and the south east will bear most of the brunt of the new charge. Analysis from estate agents Hamptons found that around 50% of all properties in England valued at over £2m were in London and 85% in the south east. 

If your property is valued at over £2m, your bill will be calculated using a sliding scale with four distinct bands:

Local authorities will identify owners and send the first bills out in March 2028. 

The HVCTS will only affect properties located in England; homes in Wales and Northern Ireland are not included. Social housing (council and housing association homes) will be exempt.

These charges will rise each year with CPI inflation from 2029‑30 onwards.

Scotland has separately announced plans to introduce two new higher council tax bands from April 2028. Properties worth between £1m and £2m would move into Band I, while those over £2m would fall into Band J. However, the final level of charges has not yet been confirmed.

• Find out more: council tax rates 2026-27: how does your bill compare?

How will valuations work? 

The Valuation Office (VO), which became part of HMRC in April 2026, will be responsible for identifying properties that fall within the scope of the surcharge.

To manage it, HMRC is recruiting approximately 1,000 new valuation officers. Treasury officials have confirmed that hiring will peak during 2027-28. While these roles cover various departments, roughly 33% are specifically allocated to the high-value surcharge. 

VO chief executive Jonathan Russell told MPs that the agency will also employ professional valuers and support staff to identify properties in scope. 

Although the charge applies to homes worth over £2m, the VO stated it will review properties valued at £1.5m and above to ensure no homes are missed. 

Assessments will be based on 2026 market values, taking into account size, location and property features. Most initial valuations will be desk-based, with officials using sales data and mapping tools to determine values rather than conducting physical inspections. 

VO valuations are expected to start in late 2026 or early 2027, although HMRC has not confirmed exactly when areas will be reviewed.

Revaluations will be conducted by the VO every five years; the next revaluation will take place in 2033.

Properties built after the charge goes live – but before the next scheduled revaluation – will be valued and banded either on completion or from the day they are occupied, as is the case with council tax. 

Properties which have been significantly improved or changed after the implementation date, for example by adding a large extension, will be revalued and banded at the sooner of either the next revaluation or sale of the property.

• Find out more: council tax calculator 2026-27

Who will pay the surcharge?

The charge is intended for the legal owners of the property – this includes freeholders and leaseholders. This means rental tenants should not be responsible for paying the surcharge. 

If there are joint owners of a property, both will be liable for payment. If the property is owned by a company, then it will be liable for the charge.

In regard to properties in trusts, the government proposes that trustees – rather than beneficiaries – be legally responsible for paying the property charge, even in ‘bare trust’ arrangements where the beneficiary has full control. 

The government says this keeps the charge in line with income tax and capital gains tax (CGT) rules, and aims to simplify administration for local authorities. In cases where multiple trustees exist, they will be jointly liable. Though they may arrange for the beneficiary to reimburse them privately.

• Find out more: paying council tax

How will the new surcharge be collected?

The new charges will be collected by local councils alongside normal council tax, but extra money collected will go to central government and not directly to local authorities. Although the money raised will be used to fund local government services. 

The charge will be collected on the same billing cycle as council tax and can be made in instalments, with the beginning and end aligned with the financial year, which starts on 1 April. 

From 2028, this will be 12 monthly payments by default, but taxpayers can request 10 payments. 

The OBR estimates 71,000 homes will fall into the first band, with another 79,000 valued between £2.5m and £5m. Approximately 15,000 homeowners will pay the highest rate of £7,500 a year, which is expected to raise an estimated £112.5m.

For homes valued between £2m and £5m, the OBR notes in its modelling that a third of owners would find that the tax takes up more than 10% of their income. Within this group, a third are expected to use their savings to pay the bill. 

For households that have neither the income nor the savings to cover the cost, the OBR predicts that 16% will sell their property instead.

• Find out more: find out how much your home is worth

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Will there be exemptions?

The government has confirmed that there will be exemptions granted for the HVCTC and this will be considered through two different methods: 

Exemptions will be granted: 

• For properties that will never be taxed due to their nature. These aren't even valued by the VO. 
• Discounts of up to 100% will be available to properties where the situation might change. These are valued by the VO, but owners must apply to their local council for a bill waiver.

The following types of property are eligible for either an exemption or a discount:

• Purpose-built halls of residence. Housing for the Armed Forces (MoD) or foreign diplomats.
• Properties owned by social housing providers, care homes, hospices, or long-stay hospital wards.
• Accommodation for those fleeing domestic violence.
• Developer-owned homes, exempt until they are sold or reach 12 months after completion.

The government is also looking into whether it is appropriate to offer a discount to people who own property because of their employment, and to properties owned for charitable purposes. 

To receive a discount, owners must submit proof of eligibility to their local council when applying. They can do this before their first bill arrives, or at any time if their circumstances change.

• Find out more: council tax bands

Will I be able to challenge the charge?

Homeowners will be able to challenge their surcharge valuation through a formal appeals process, modelled on the existing council tax system. 

Homeowners will be able to dispute: 

• Their banding: if they believe their property is in the wrong price bracket or shouldn't be on the list at all. This will be handled by the VO. 
• Their liability: if they believe they aren't the person responsible for paying, or the bill has been applied incorrectly. This will be handled by the local authority.
  

Some of the key deadlines proposed by the government include: 

The OBR estimates that 20% of homeowners – which is approximately 33,000 households – will formally appeal their property valuation to avoid the charge.

The success rate of these appeals is projected to sit around 40%. This would mean that around 13,200 properties would be successfully removed from the charge altogether or moved to a lower band. 

Estate agents and other property experts have said affected homeowners should keep property records – such as purchases, improvements, and planning info to hand to potentially be used in the challenge process.

• Find out more:how easy is it to challenge your council tax band?

What if I can't pay?

The OBR has projected an overall non-payment rate of around 6%. The government is currently consulting on a support scheme to help those affected who are unable to pay. 

This is being proposed as 'deferrals' and will allow owners with low incomes to delay their payments until the property is sold. Under the current proposals, this will be available to those whose property is their primary residence and who have both:

• An annual household income of £35,000 or less
• Capital savings of below £16,000

Deferral will also be available in certain circumstances where the property is the main home of someone who is disabled or severely mentally impaired – in line with existing council tax rules. To get this, you would need to: 

• Meet the criteria of the council tax band reduction scheme, which requires evidence that the property has either: an extra bathroom, kitchen or other room that is needed for the disabled person; or extra space inside the property for using a wheelchair.
• To provide a certificate from a medical professional, such as a GP, and prove their eligibility for certain benefits. 

Deferrals are proposed to work like adult social care payment plans: 

• You must have enough value in your home to cover the eventual bill. Generally, you can only defer up to 90% of your home's value (after subtracting your mortgage and a small protected amount).
• Interest will be added to the debt over time. While the government hasn't picked a specific rate yet, it will be the same fixed rate across the whole country. 
• The government will place a legal 'charge' (lien) on your property. This makes sure that when the house is eventually sold, the deferred tax and interest are paid off first.

Deferral will not be available in respect of second homes or to companies which own property.

• Find out more: what to do if you can't pay your mortgage

Can I devalue my home to avoid it? 

Historically, homeowners have taken drastic steps to avoid property taxes. The 17th-century Hearth Tax led people to block fireplaces, while the 1696 Window Tax prompted owners to brick up windows.

However, trying to lower your home's value to avoid the tax is risky. You might make your house less attractive to buyers, but the VO could still decide it's worth over £2m based on its size and location. 

Making big changes like knocking down walls can be expensive and often require legal permits. Selling off your driveway or garden could also trigger a bill for capital gains tax. So, simply put, don't go making any drastic alterations in a bid to avoid the high-value charge.

With the new system based on 2026 evaluations, there isn't much time left to act. However, it's best to wait for the government to confirm the final details of the scheme so you can make an informed decision – rather than a costly mistake.

• Find out more: 7 common mistakes when selling your home

This article has been updated since it was first published to include details of the latest consultation. It was last published on 27 May.