The UK government has introduced a new property tax known as the Mansion Tax (officially the High Value Council Tax Surcharge, or HVCTS), set to affect high-value residential properties worth £2 million or more starting April 2028. Proposed in the Autumn Budget 2025, this tax will be based on valuations conducted by the Valuation Office Agency (VOA) in 2026. The new surcharge, which ranges from £2,500 to £7,500 per year, will affect landlords, property companies, and business owners. Our guide will help you understand the tax, its costs, and what steps you need to take to prepare for the changes.
What is Mansion Tax?
The Mansion Tax (officially the High Value Council Tax Surcharge) is an additional council tax applied to residential properties in England valued over £2 million. This tax was introduced to address fairness in the property tax system, ensuring that high-value homes pay more in line with their worth.
Key Points to Note:
- Applies to properties valued at £2 million or more.
- Charged annually, in addition to regular Council Tax.
- Property values will be based on 2026 valuations, not the 1991 Council Tax bands.
- The tax is paid by the property owner, not the occupier.
- It will be collected by local councils, but the funds will go to the central government.
- The surcharge bands will rise annually in line with CPI inflation.
- Fewer than 1% of residential properties in England will be affected.
Who Will Be Affected by Mansion Tax?
Landlords
Landlords who own residential properties worth over £2 million will need to pay the Mansion Tax. This applies whether the property is rented out, used as a second home, or left vacant.
Property Companies
Companies that own high-value residential property (e.g., Special Purpose Vehicles (SPVs)) will be liable for the surcharge. It doesn’t matter if the property is used for business purposes or not.
Sole Traders and Small Business Owners
Sole traders or business owners who personally own residential property valued over £2 million will be liable, even if the property is used for business purposes. Only the residential portion of the property will be taxed.
How Much Will the Mansion Tax Cost?
These fees will be added annually to the regular Council Tax bill. Additionally, the tax rates will increase annually with CPI inflation. Here’s a simple breakdown of how the tax will work:
- Properties valued between £2 million and £3 million: Likely to pay around £2,500 annually.
- Properties valued between £3 million and £4 million: Around £5,000 annually.
- Properties over £4 million: You could pay £7,500 or more.
The exact amount you will pay depends on your property’s value. This charge is separate from your regular council tax.
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Book an AppointmentWhatsApp UsWhen Will the Mansion Tax Take Effect?
The Mansion Tax will be implemented in stages:
- Valuation Phase (2026): In 2026, the Valuation Office Agency (VOA) will assess residential properties in England to determine which ones are valued at £2 million or more based on current market values. Properties that meet this £2 million threshold will then be grouped into bands for the new High Value Council Tax Surcharge (HVCTS)
- Launch (April 2028): The surcharge will officially begin in April 2028, and property owners will start paying it as part of their Council Tax bills.
- Review Cycle: Properties will be revalued roughly every five years, ensuring that the Mansion Tax remains in line with current property values.
What Are the Implications for Property Valuation?
To determine if your property is liable for the Mansion Tax, the Valuation Office Agency (VOA) will assess your property’s value. It’s important to make sure your property valuation is correct, as this will determine how much tax you will pay.
These valuations will determine which surcharge band your property falls into and how much extra tax you will pay from April 2028. Because high‑value homes are often unique, VOA valuations may use data, sales evidence and modelling rather than in‑person inspection. Other property experts suggest that paying for a professional independent valuation now can give you a better understanding of likely value before the VOA assessment.
How Can Landlords, Companies, and Business Owners Prepare?
Start by ensuring your property is accurately valued. The Valuation Office Agency (VOA) will assess your property value for the Mansion Tax, but if your property is close to the £2 million threshold, it’s worth getting a professional valuation to ensure accuracy. The 2026 valuation will be crucial for determining your tax liability.
Final Thoughts: What Businesses Should Do Next
The Mansion Tax is now a confirmed part of the UK property tax system, set to start in 2028. Businesses, landlords, and property owners must plan for this permanent annual fee, which will increase with inflation.
This tax is not something to address at the last minute. It will affect long‑term investments, property strategy, and financial planning. Property owners should review their exposure early, model the potential cash‑flow impact, and consider timing and liquidity before the 2026 valuations are finalised and the surcharge takes effect in April 2028. Acting proactively can help mitigate unexpected costs and give you more time to plan for the new High Value Council Tax Surcharge.
