The Chancellor of the Exchequer has confirmed during the Budget that the highly speculated ‘mansion tax’ will be introduced in the UK. This ‘tax’ will come into force in April 2028.
Owners of properties valued over £2 million will have to begin paying a surcharge of at least £2,500. This will be in the form of an annual charge which will be payable on top of existing council tax. All funds from the charge will go to the Treasury directly, instead of the local authority.
We have been informed that the annual charge will increase depending on the price of the property, and there will be four separate bands.
Currently we know that properties valued between £2 million and £2.5 million will pay an annual charge of £2,500, and properties worth over £5 million will pay an annual charge of £7,500. These charges will also increase year by year in line with the Consumer Prices Index.
It is likely that around 100,000 properties will have to pay the charge, with the majority of these properties being located in London and Southeast England.
Considering that property values, for the purposes of council tax, are based on valuations from 1991, the government’s Valuations Office Agency will revalue properties to consider whether they meet the requirements to pay the ‘mansion tax.’ These valuations will be completed in 2026 and will form the basis of whether a property is worth over £2 million or not. The current idea is that only properties in the top three council bands (F, G and H) will be valued, meaning that around 2.4 million properties across the country will be assessed.
It is important that anyone purchasing a ‘high value’ property has an idea that they may be liable to pay this surcharge. It is also important for people in the top three council tax bands to be informed that their property may be valued by the government next year. Property owners can currently check their council tax band using the below links.
