The chancellor used her 2025 Autumn Budget to announce a “Mansion Tax” payable on properties valued at £2 million or more.
Officially known as the High Value Council Tax Surcharge, the widely predicted measure is expected to be levied on just 1% of properties in England when it comes into force from April 2028. But if your property is among those affected, you may need to find an additional £7,500 a year.
Keep reading for a closer look at how the charge will be calculated and whether your property will be included.
From April 2028, you could see between £2,500 and £7,500 added to your Council Tax bill
Applied on top of current Council Tax bills and payable by homeowners (not occupiers), the Mansion Tax will be based on property values for 2026, as decided by the Valuation Office, which is set to conduct a “targeted valuation exercise” between now and April 2028, with revaluations every five years.
Charges are expected to be levied in line with four proposed bands:
- £2,500 for properties worth £2 million to £2.5 million
- £3,500 for properties worth £2.5 million to £3.5 million
- £5,000 for properties worth £3.5 million to £5 million
- £7,500 for properties worth over £5 million.
Not only could your £5 million home be subject to an additional £7,500 annual charge, but the amounts are also not fixed. Instead, they will rise in line with the Consumer Prices Index (CPI) from 2029/30.
High-level policy is agreed, but a public consultation will be followed by an ironing out of the details
While most details of the legislation appear to be all but finalised, the government is due to hold a public consultation on certain aspects of the tax in the coming months.
Concerns are likely to be centred around London and the south-east, where the majority (around 82% according to the Telegraph) of the 140,000 affected homes are situated.
HNW pensioners – potentially asset-rich but cash-poor – are likely to be among the groups impacted by the new rules. For those relying on fixed pension income, the additional charge could prove hard to find. Some may even be forced to consider downsizing.
But some steps can be taken now to mitigate the impact of the measure.
3 simple ways to prepare for the introduction of the Mansion Tax
1. Determine whether the charge applies to your home
The Valuation Office is expected to begin its work next year, but valuations will be based on 2026 prices so you might seek your own valuation now in order to start preparing. Simple online valuation tools can give you a rough idea of your property’s worth, but for a more accurate picture, a professional valuation might be required.
Understanding the value of your property means you’ll be able to see where in the four bands your charge will likely fall and begin to plan accordingly. Remember, the charge ranges from £2,500 to £7,500, so an accurate valuation is key.
2. Factor the potential charge into your budget now
While a potential charge won’t be due until 2028, once you know what you will have to pay, it might make sense to factor it into your budget now.
Doing so will allow you to think about where the money will come from and its effect on your household finances, while there’s still plenty of time to amend your plans. If your property value falls close to the threshold between bands, you might consider preparing for the higher charge to allow for house price rises over the next 12 months.
3. Revisit your plans to mitigate the impact of the tax on your goals
While the additional charge – especially when paid over many years – will be significant, with careful planning, there’s no reason for it to impact your long-term financial goals.
We can help you to keep on track through annual reviews and minor changes, helping to maintain your lifestyle now, while continuing to build wealth toward your dream retirement.
Get in touch
The introduction of the Mansion Tax is still two years away, but if you think it will apply to you, now is the time to act. If you’re concerned about the new measure or its potential impact on your long-term plans, get in touch with HFMC Wealth today. Contact us online or call 020 7400 4700 today to help plan your loved ones’ financial future.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
