Category: Taxes

The UK government is set to introduce a new tax assurance plan in mid-2026. This initiative aims to provide clarity on tax obligations for major infrastructure projects before they even begin. With this move, the government hopes to streamline the process, reduce disputes, and make investments more attractive to businesses. Here’s what UK tax assurance plan means for the future of infrastructure development in the UK.

What Is the UK Tax Assurance Plan?

The Tax Assurance Plan is designed to give investors certainty about their tax positions before launching large-scale infrastructure projects. By confirming tax obligations in advance, this initiative aims to reduce the chances of legal disputes and costly delays caused by unclear tax positions.

This program will help businesses avoid tax-related surprises that could arise after an audit. It aims to resolve any uncertainties early in the planning stage, helping businesses move forward with confidence.

Why Is the Tax Assurance Plan Important?

Reduces Uncertainty: 

Tax-induced uncertainty has often led to higher costs, known as “uncertainty premiums,” during audits. This new assurance service will help businesses avoid these extra costs.

Encourages Investment: 

By providing clarity early on, the plan makes it easier for businesses to plan their investments. This is especially crucial for major infrastructure projects, which often require large financial commitments.

Streamlines Major Projects: 

Clarity on tax obligations for major infrastructure projects reduces the risk of disputes, speeding up the planning and development process for infrastructure projects.

How Will It Benefit UK Businesses?

1. Early Clarity on Tax Positions: Investors can now secure assurance about their tax obligations well before starting projects. This clarity ensures there are no surprises down the line.
2. Minimises Risk of Legal Disputes: By resolving any potential tax issues upfront, businesses can avoid long and expensive court battles.
3. Encourages Economic Growth: The government’s goal is to create a more predictable tax environment, which could attract more investment and stimulate growth in key industries.
4. Saves Time and Money: The plan helps reduce costs associated with resolving tax disputes and ensures a smoother project execution.

Impact on Major Infrastructure Projects

This tax assurance plan is especially important for large-scale infrastructure projects, which often involve significant investments and complex tax regulations. By ensuring that tax positions are clear from the outset, businesses can avoid costly delays and proceed with their projects without the added stress of unresolved tax issues.

As the government seeks to stimulate economic growth through infrastructure investment, this initiative aligns with their broader objectives to create a stable, transparent, and business-friendly environment.

How Our Tax Planning and Assurance Services Can Help

Apex Accountants provide expert advice on tax planning and assurance services. Whether you are embarking on a large infrastructure project or need guidance on your tax obligations, we are here to help you navigate the complexities of the UK tax system. Our services are designed to ensure compliance while maximising opportunities for growth.

Conclusion

The introduction of the Tax Assurance Plan in 2026 offers a major opportunity for businesses involved in large infrastructure projects. By providing clarity on tax obligations upfront, the UK government aims to reduce uncertainty and prevent costly disputes, allowing projects to proceed more smoothly. This initiative is designed to encourage investment, reduce legal risks, and ensure that businesses can move forward with confidence.

We specialise in providing expert guidance on tax planning and assurance services. Our team can help ensure your business is fully prepared for the Tax Assurance Plan and that you are compliant with all relevant regulations. Contact us today to book a consultation and secure the clarity and support your project needs to succeed.

FAQs

What is the Tax Assurance Plan?

The Tax Assurance Plan allows investors to confirm their tax obligations before starting major infrastructure projects. It aims to reduce uncertainty and avoid costly disputes.

When will the Tax Assurance Plan begin?

The plan is expected to start in mid-2026, offering businesses clarity on their tax obligations well before launching projects.

How does the Tax Assurance Plan benefit my business?

The plan provides early clarity on tax positions, reduces the risk of legal disputes, and makes it easier for businesses to plan their investments with confidence.

What impact will this have on infrastructure projects?

The plan will streamline major projects by removing tax uncertainties, helping businesses move forward with their developments more quickly and with fewer risks.

How can Apex Accountants help with the Tax Assurance Plan?

At Apex Accountants, we offer expert guidance on tax planning and assurance services. Our team can help ensure your business is ready for the new tax assurance plan, saving you time and money.

The 2025 Autumn Budget introduced a High Value Council Tax Surcharge on homes valued above £2 million. Commonly referred to as the mansion tax, this levy has caused significant uncertainty within the prime property market. Many buyers and sellers held off on their decisions, unsure of how the new charge would affect them. As a result, sales of properties over £1 million slowed. Now that the rules are clearer, activity is starting to pick up again. The impact of the mansion tax on the prime property market is becoming more apparent as demand begins to return, but the question remains: is this a genuine recovery or just a temporary bounce?

A Break-Down of the Impact of Mansion Tax on Prime Property Market

What Has Changed in the Market?

• Uncertainty turned to clarity: 

Before the tax was confirmed, buyers and sellers were hesitant. Once the government clarified the High Value Council Tax Surcharge, enquiries for high-value homes began to rise again.

• Not all buyers will react the same way: 

Wealthy buyers in prime areas like London and Surrey are more likely to absorb the surcharge as part of the overall cost of securing their ideal property. Meanwhile, buyers with tighter budgets might look to more affordable areas to avoid falling into a higher tax band.

• Interest rates impact: 

The Bank of England is expected to reduce the base rate further. With fixed mortgage rates around 3.5%, coupled with high loan-to-income ratios available from some lenders, the market is presenting a rare window of opportunity. However, brokers warn that this opportunity could be short-lived if inflation or market sentiment shifts.

Who Will Feel the Impact?

The mansion tax applies to residential properties in England valued above £2 million. The Valuation Office Agency (VOA) will assess the market value of properties in 2026, and these valuations will be updated every five years.

You will pay the surcharge if:

• Your property is valued over £2 million based on the 2026 valuation.
• You own a second home, holiday home, or buy-to-let property worth above £2 million.
• You own a property through a company or trust, and its market value exceeds the £2 million threshold.
• You are a non-resident who owns a qualifying home in England.

You will not pay the surcharge if:

• Your property is valued below £2 million.
• Your property is in Scotland, Wales, or Northern Ireland.
• The property is non-residential (commercial).
• The property is social housing.

Mansion tax on high-value property in London and the South East will likely face the greatest impact, as property values in these areas have increased more rapidly. Almost one in four affected homes are located in Kensington and Chelsea, Westminster, and Camden. Even a small flat in central London may exceed the £2 million threshold.

How Are Mortgage Rates Affecting the Market?

Falling interest rates and competitive lending criteria are currently supporting the rebound in the property market.

• Falling mortgage rates: With fixed-rate mortgages now available around 3.5%, buyers are able to manage their monthly payments more easily.
  
• Opportunities for first-time buyers: Some banks are offering higher loan-to-income multiples (up to 6.5 times salary for higher earners), which could help both first-time buyers and existing homeowners looking to trade up.

However, lenders caution that these favourable mortgage conditions could disappear if inflation rises or market sentiment changes.

Impact of Mansion Tax on Second Homes, Downsizers and Supply

The mansion tax coincides with broader questions about property ownership, especially for second-home owners and those considering downsizing.

• Second homes and investors: Those with holiday homes or buy-to-let properties may reassess their portfolios. The mansion tax on second homes, along with higher stamp duty and rental income tax, could encourage some to sell.
  
• Downsizers: Older homeowners who are “property-rich but cash-poor” might find that maintaining a large home is no longer financially feasible. Downsizing could reduce both their council tax and the mansion tax surcharge.
  
• Impact on supply: As some homeowners decide to sell, there may be an increase in the availability of prime and near-prime properties in the market. However, this increase is likely to be uneven, varying by region and price band.
  

Mansion Tax Guidance for Buyers and Sellers

Navigating the mansion tax requires careful planning. Here are practical steps to consider:

• Check your property’s value: Review recent local sales, use online valuation tools, or consider a formal valuation if your property is near the £2 million threshold.
  
• Budget for the surcharge: Plan for the annual cost of the surcharge, which could range from £2,500 to £7,500, depending on the property’s value.
  
• Review your ownership structure: Owning property through a company or trust does not avoid the surcharge. Consider the tax implications, including capital gains tax, inheritance tax, and rental income tax.
  
• Avoid rushed decisions: Selling a property in haste to avoid the surcharge could lead to higher stamp duty, transaction fees, and poor timing.
  
• Stay updated: The government will consult on exemptions, deferral rules, and relief options, which could affect how much you ultimately pay.
  

How Apex Accountants Can Help Manage The Impact of Mansion Tax on High-Value Properties

At Apex Accountants, we offer bespoke tax and financial advice to help you manage the mansion tax and related changes. Our services include:

• Property tax planning: Review your entire property portfolio, estimate exposure to the 2026 valuations, and calculate likely mansion tax costs.
  
• Council tax and valuation support: Assess whether VOA valuations are reasonable, prepare evidence for appeals, and manage communication with the VOA and HMRC.
  
• Ownership structure advice: Evaluate the pros and cons of owning property personally, jointly, or through a company, and assess the implications for capital gains tax, inheritance tax, and rental income tax.
  
• Investment and cash-flow planning: Incorporate the mansion tax into long-term forecasts, model different scenarios for landlords and investors, and support decisions on selling, downsizing, or rebalancing portfolios.
  
• End-to-end advisory for high-value homeowners: one-to-one consultations, a full property tax review, and ongoing updates as government rules evolve.

Conclusion

The mansion tax is already reshaping the prime property market. The initial uncertainty led to a slowdown, but clarity has provided a short-term bounce. Lower mortgage rates and competitive lending criteria offer a brief opportunity. However, the long-term impact will depend on how buyers, sellers, and the government respond. Since property valuations are scheduled for 2026 and the surcharge will take effect in 2028, it is crucial to plan ahead. We help clients understand their liabilities, explore options, and make informed decisions in this evolving landscape.

FAQs About Masion Tax on Property in UK 

1. How is my property valued? 

The VOA will revalue homes that are likely to exceed £2 million, using market prices from 2026. Owners may be asked for information to help with the valuation. If you believe the valuation is incorrect, you can appeal.

2. What does the surcharge cost? 

The government has set four annual bands:

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

The charge will rise with inflation and will be collected by local councils but sent to the Treasury.

3. Does the surcharge apply to second homes or portfolios? 

Yes, second homes, holiday homes, and investment properties in England valued above £2 million are subject to the surcharge.

4. Can I defer the charge if I am asset-rich but cash-poor? 

The government is consulting on potential reliefs and exemptions.

5. Will the surcharge affect property prices? 

The surcharge could cause property prices to “bunch” just below £2 million, as buyers and sellers adjust their expectations.

6. What is happening to rental income tax? 

From April 2027, property income tax rates will increase by two percentage points: the basic rate from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47%.

7. Will National Insurance apply to rental income? 

There has been no announcement regarding the application of National Insurance to rental income.

8. Could rents increase? 

The Office for Budget Responsibility has suggested that the changes could reduce returns for private landlords and may lead to upward pressure on rents.

9. Are there changes to Stamp Duty or capital gains tax? 

No, the Stamp Duty thresholds remain unchanged, and principal private residence relief continues.

The UK government has signalled a major shift in its tourism policy. Under proposals due to be finalised in February 2026, mayors will have the power to add a small surcharge to hotel bills. This visitor levy in the UK, often called a tourist tax, would be charged per person per night and apply to hotels, bed and breakfasts, guest houses and holiday lets. The aim is to reinvest the money directly in local infrastructure, transportation, and visitor facilities. Although similar taxes are common in Europe, the plan has prompted both enthusiasm and criticism. 

Here we explore what it means for hotels and travellers.

What Is a Tourist Tax?

• A tourist tax (also known as a visitor levy) is a small fee added to accommodation bills for overnight stays. It may be a flat charge per person per night or a percentage of the room rate.
  
• Many European cities use visitor levies to fund local services; for example, Venice and Barcelona have used such taxes to invest in infrastructure and manage overtourism.
  
• The UK government’s plan would bring England in line with Scotland and Wales, where local authorities already have powers to introduce similar levies.

Why Introduce a Tourist Levy Now?

• The government argues that a modest charge on overnight stays could raise substantial revenue for local projects. England welcomes more than 130 million overnight visits each year, so even a £1–£2 fee could generate millions for transport upgrades, heritage preservation and cultural events.
  
• Ministers say the levy would ensure that visitors contribute to the upkeep of the destinations they enjoy.
  
• Mayors across England—including those in London, Manchester, Liverpool and the West of England—have welcomed the proposal, seeing it as a tool to fund growth and improve tourist experiences.

Read how Rachel Reeves’ tourist tax plancould change how UK cities manage overnight accommodation fees.

Concerns Raised by the Hospitality Sector

While the government stresses the levy will be modest, industry groups are nervous:

• Cost to consumers: The sector warns that if the tax were set at 5%, similar to Edinburgh’s planned levy, it would effectively raise the VAT rate on hotel stays to 27%. Their analysis suggests the levy could cost British holidaymakers up to £518 million in extra charges.
  
• Competitiveness: Critics argue that high taxes could make the UK less attractive compared with destinations where VAT rates on accommodation are lower. Hotel leaders warn that adding another cost would squeeze margins and deter investment.
  
• Staycation impact: The trade body points out that Brits took 89 million overnight trips and stayed 255 million nights in England in 2024. Additional costs could discourage domestic holidays and drive visitors to cheaper destinations.

Could a Visitor Levy Really Drive Guests Away?

• Evidence from European cities suggests that small, transparent levies rarely reduce visitor numbers. Research cited by the UK government shows that reasonable fees have minimal impact on tourism.
  
• Travellers often accept modest charges when they see clear benefits, such as improved public spaces and cultural events. The levy could help fund major events in cities like Liverpool and London.
  
• However, there is a tipping point. High charges may hurt price‑sensitive travellers. The hospitality industry’s concern is that, combined with existing VAT and business rates, the levy could push prices beyond what many guests can afford.

The Impact of Tourist Tax in UK

• Manchester’s City Visitor Charge: Since April 2023, hotels and serviced apartments in central Manchester have collected a £1 per night fee to fund a Business Improvement District. Within a year, this levy raised over £2.8 million to support tourism marketing and events.
  
• Liverpool’s Accommodation BID: Liverpool collects a small percentage of visitors’ accommodation bills to fund local improvements.
  
• Bournemouth, Christchurch and Poole (BCP) tourist levy: From July 2024, this coastal area introduced a £2 per room, per night charge to protect its local economy and fund events such as the Bournemouth Air Festival. The scheme is expected to raise over £12 million in five years.

These examples show that small levies can generate significant funds without deterring visitors, provided the rates remain modest.

How Should Hotels Prepare For Tourist Levy?

To adapt to a potential tourist levy, accommodation providers can:

• Monitor local proposals: Each mayor will decide if and when to introduce a levy. Stay informed about consultations and timelines.
  
• Plan pricing strategies: Consider whether to itemise the levy as a separate line on bills or bundle it into room rates. Transparent communication helps guests understand the charge
  
• Emphasise value: Highlight improvements funded by the levy, such as better transport links or enhanced attractions. Position your property as contributing to the community.
  
• Review cashflow: Small levies can accumulate. Work with your accountant to forecast how the tax will affect revenue and VAT liabilities.
  
• Advocate responsibly: Participate in consultations to ensure the levy is fair and supports hospitality businesses.
  

How We Help The Hospitality Sector Prepare For The Tourist Tax in UK

As Apex Accountants, we provide specialist support to hotels, B&Bs and hospitality businesses preparing for the tourist tax:

• Visitor levy impact assessments – projecting how different levy rates could affect occupancy and revenue.
  
• Pricing and tax strategy – advising whether to absorb, pass on or bundle the levy and how to manage VAT.
  
• Cashflow forecasting – helping you budget for levy payments and ensure compliance.
  
• Consultation guidance – assisting with submissions to local government consultations to ensure your voice is heard.
  
• Ongoing accounting support – delivering day‑to‑day bookkeeping, payroll and tax services tailored to hospitality.

Our team of experts specialises in helping the hospitality sector navigate new tax challenges. We can provide tailored advice on pricing strategies, tax planning, and compliance. Contact us today to ensure your business is prepared for the proposed tourist tax.

Conclusion

The proposed tourist tax represents a new chapter for England’s hotel industry. By giving mayors the power to raise revenue locally, the government hopes to invest in infrastructure and enhance the visitor experience. Yet the hospitality sector warns that high rates could deter guests and add to an already heavy tax burden.

For hotel operators, the key is preparation. Stay informed, engage in consultations, and plan your pricing strategy. A well-managed visitor levy, kept at a modest level, can generate funds for much-needed improvements without sending guests elsewhere. With careful planning and expert advice, England’s hotels can survive — and even thrive — under a tourist tax.

FAQs About The Tourist Tax in UK

When researching this topic, several common questions arise:

• Will every city impose a tourist tax? 

No. Mayors have discretion to introduce a levy if it suits their local economy. Some areas may choose not to implement it.

• How much will it cost? 

The government has not set a national rate. Examples elsewhere range from £1 per person per night in Manchester to 5% of the room rate planned in Edinburgh.

• Where will the money go? 

Funds must be reinvested locally in transport, infrastructure and the visitor economy.

• Will it make UK holidays unaffordable? 

Moderate fees are unlikely to deter visitors; however, hospitality leaders warn that high rates could raise overall costs and dampen demand.

• Do other UK cities already have a levy? 

Yes. Manchester, Liverpool and BCP collect small charges, and they have raised millions for local projects.