‘Mansion Tax’ consultation: what the High Value Council Tax Surcharge means for property owners

High Value Council Tax Surcharge (HVCTS) consultation: key details and timeline

The government has published a consultation on the design of the High Value Council Tax Surcharge (HVCTS), a new charge on residential properties in England valued at £2 million or more.

This follows the announcement at Autumn Budget 2025 that this so called ‘mansion tax’ would be introduced from April 2028. The consultation seeks views on how the surcharge will operate in practice, including the scope, valuation, deferrals and administration.

How the High Value Council Tax Surcharge (HVCTS) will work: rates, thresholds and key rules

Under the proposed rules, the surcharge will:

• Apply from April 2028 to residential property in England valued at £2 million or more.
• Be payable annually in addition to existing council tax.
• Be administered alongside council tax by local authorities.
• Be charged on property owners rather than occupiers.

Properties would be placed into value bands, with fixed annual charges. The consultation proposes the following thresholds:

• £2 million to £2.5 million – £2,500.
• £2.5 million to £3.5 million – £3,500.
• £3.5 million to £5 million – £5,000.
• Over £5 million – £7,500.

Charges are expected to increase annually in line with the Consumer Price Index.

Property valuations for HVCTS: how £2m+ homes will be assessed in 2026

The Valuation Office will carry out a targeted valuation exercise to identify properties within scope.

Current proposals suggest:

• Properties will be valued based on their estimated market value in 2026.
• These values will form the basis for the surcharge from April 2028.
• Revaluations will take place every five years.

The valuation approach will combine automated valuation models with professional judgement, using comparable sales and property data.

Who will pay the ’mansion tax’?

A key feature of the proposals is that liability will generally fall on the legal owner of the property rather than the occupier.

This means:

• Freeholders and long leaseholders (leases of more than 21 years) will be liable.
• Companies holding residential property will be liable.
• Trustees will be liable for property held in trust, including in bare trust arrangements.

This represents a shift from the council tax position, where liability typically falls on the occupier.

HVCTS deferral rules: support for ‘asset rich, cash poor’ homeowners explained

The government recognises that some individuals may own high-value properties but have limited income.

A deferral scheme is therefore proposed, allowing eligible individuals to delay payment until the property is sold.

The current proposals suggest eligibility where:

• The property is the individual’s main residence.
• Household income is £35,000 or less.
• Capital savings are £16,000 or less.

Deferred amounts would accrue interest and be secured against the property provided there is sufficient equity in the property to cover the deferred amounts.

HVCTS exemptions and discounts: which properties qualify?

The consultation proposes a relatively limited set of exemptions and discounts, including:

• Student accommodation,
• Armed forces and diplomatic housing,
• Social housing,
• Properties used for care or refuge, and
• New build residential property held by a developer, until the earlier of first sale or 12 months after completion.

It also considers potential discounts for specific circumstances, including:

• Tied accommodation where individuals are required to live in a property as part of their employment, noting this is especially relevant in the farming sector, and
• Property owned for charitable purposes.

HVCTS administration and appeals: how billing, challenges and enforcement will work

The surcharge is expected to follow a similar framework to council tax.

Under current proposals:

• Local authorities will identify liable owners and issue bills.
• A draft list of properties will be published ahead of implementation.
• Taxpayers will be able to challenge valuations or liability.
• Appeals will be heard by the Valuation Tribunal.

HVCTS for non-UK residents:  will overseas property owners pay more?

The consultation explores whether an additional premium could apply to non-UK resident owners.

HVCTS next steps: consultation deadline and legislation

The consultation runs until 14 July 2026.

Following this, the government is expected to publish its response and draft legislation ahead of implementation in April 2028.

We are reviewing the proposals in detail and will contribute to the consultation. Key areas of focus are likely to include valuation methodology, the very limited exemptions and how the surcharge interacts with existing property taxes.

Advice on ‘mansion tax’: how Saffery can help property owners prepare

If you hold high-value residential property, it will be important to understand how the proposed surcharge could affect your position. If you would like to discuss this further, please speak to your usual Saffery contact or get in touch with Zena Hanks.