Owners of properties valued over £2 million could soon face a charge on top of their council tax. The High Value Council Tax Surcharge (HVCTS) was announced in the Budget.

As the Treasury launch their consultation on the new charge, they have given some further insight as to how it all works.

What is the mansion tax?

The Government says that the tax will apply to less than one per cent of properties across England.

Local authorities will identify owners and send out the first bills in 2028. The cost of the bill depends on how much your property is worth.

For properties between £2 million and £2.5 million the rate is set to be £2,500 whereas properties worth over £5 million face staggering rates of £7,500.

Each year these charges will increase in line with the Consumer Price Index from 2029-2030 onwards.

This tax is paid in addition to Council Tax.

How do they know how much my property is worth?

The Valuation Office which became a part of HMRC in April 2026 will be responsible for identifying properties that will fit within the scope of the surcharge.

Assessments will be based on 2026 market values which considers the size, location and property features.

Valuations initially will be done in an office rather than in the home, Valuation officers will use sales data and mapping tools to accurately determine the value of the property.

If you believe that your property has been put in the wrong band you are able to challenge the surcharge through a formal appeals process.

If you buy a new build property after the charge goes live it will be valued and banded on the completion day or from the date of occupancy.

Home renovations are extremely popular, however if you decide to significantly improve your home after the implementation date your property will be revalued and banded at the next revaluation or if the property is sold – whichever is sooner.

Are there any exceptions to the mansion tax?

The Government has confirmed that there will be some exemptions granted for the HVCTC which will be considered through two methods.

Firstly, for properties that will never be taxed because of their nature they will not even be considered by the Valuation officers.

Additionally, discounts of up to 100 per cent will be available for properties where the situation may change, they are valued by the officers, but owners must apply to their local councils for a bill waiver.

Examples of properties that may be granted exemptions include purpose-built halls of residence, properties owned by social housing providers, accommodation for those fleeing domestic violence and developer owned homes until they are sold.

How we can help?

Understanding how tax changes may impact you when they first come into force is important.

Our team are here to help you plan your tax contributions to see how it fits into your personalised tax plan.

Get in touch today, for tailored property tax advice from professionals