Rachel Reeves unveils new ‘mansion tax’ on largest houses
The so-called ‘mansion tax’ is expected to impact between 100,000 and 200,000 homes, costing between an extra £2,500 and £7,500 a year on houses worth more than £2 million
Rachel Reeves has unveiled a tax on homes worth more than £2million to help ensure the richest do their bit.
The so-called “mansion tax” is expected to impact between 100,000 and 200,000 homes, costing an extra £2,500 on homes worth more than £2 million, and £7,500 a year on houses worth more than £5 million.
The Chancellor’s move is expected to raise around £400million for the Treasury every 12 months, is set to raise £0.4 billion in 2029/30 and is called a “high value council tax surcharge“.
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She said: “In this Budget, I will take further steps to deal with a longstanding source of wealth inequality in our country.
“Currently, a Band D home in Darlington or Blackpool pays just under £2,400 in council tax… nearly £300 more than a £10m mansion in Mayfair.
“And so from 2028, I am introducing the High Value Council Tax Surcharge in England.”
In England, council tax is split into different bands, based on how much the property was worth in April 1991. The Chancellor’s plans target those with F, G and H homes. Ms Reeves explained the surcharge would be imposed on fewer than the top 1% of properties.
Unlike normal council tax, which goes into local council budgets, this new charge will go directly to the Government.
Council tax bands explained
Council tax is split into bands, based on how much the property was worth in April 1991. Here is how the bands are split in England:
- A – up to £40,000
- B- £40,001 to £52,000
- C- £52,001 to £68,000
- D- £68,001 to £88,000
- E- £88,001 to £120,000
- F- £120,001 to £160,000
- G- £160,001 to £320,000
- H – more than £320,000
The average Band D council tax in England for the 2025-2026 financial year is £2,280. Scotland and Wales have different council tax bands.
In its response, the Office for Budget Responsibility said: “From April 2028, owners of properties identified as being valued at over £2 million by the Valuation Office (in 2026 prices) will be liable for a recurring annual charge which will be additional to existing council tax liability.
“There will be four price bands with the surcharge rising from £2,500 for a property valued in the lowest £2million to £2.5million band, to £7,500 for a property valued in the highest band of £5million or more.”
It was originally reported that the Chancellor wanted to introduce a £1.5million threshold, which would have affected 300,000 households, but was increased to £2million to avoid penalising “asset-rich, cash poor” families.
Earlier this month The Institute for Public Policy Research (IPPR) say reforming property tax reform could slash council tax bills by 3% for four in five households, raising cash to fund vital public services
