Mansion Tax in UK to Affect 200,000 Homes Starting in 2028

The UK government has introduced the High Value Council Tax Surcharge, also known as the mansion tax, which will impact up to 200,000 properties. This tax targets residential homes valued over £2 million, mainly in London, the South East, and the East of England. The policy aims to raise substantial revenue and tackle housing inequality. In this article, we’ll explain what the mansion tax in UK entails, who it affects, and how property owners can prepare for upcoming changes.

What is Mansion Tax?

The official name of the tax is the High Value Council Tax Surcharge (HVCTS). The UK government will apply the surcharge annually to properties valued over £2 million. It will add to the normal council tax, increasing the total tax bill for homeowners in this price bracket. The mansion tax targets properties in affluent areas, particularly central London.

In its current form, the tax will have the following structure:

• Properties worth £2.0 million to £2.5 million will pay an additional £2,500 annually.
• For homes valued between £2.5 million and £3.5 million, the charge will be £3,500.
• £5,000 will apply to homes valued between £3.5 million and £5 million.
• The highest charge of £7,500 will apply to homes worth over £5 million.

These charges will start in April 2028. Inflation will annually uprate these taxes to reflect economic changes. For homeowners, the result means higher property taxes on top of standard council tax fees.

For a detailed breakdown of the mansion tax in 2025, including key thresholds and exemptions, explore our full guide to the high-value council tax surcharge.

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Who Will Be Affected?

Around 200,000 properties are expected to be subject to the mansion tax, with the majority of those homes located in London, the South East, and the East of England. The charge will impact high-net-worth individuals (HNWIs) who own properties in areas where values have increased significantly over time.

Although the £2 million threshold is considered high in the property market, many smaller homes, such as apartments or townhouses in sought-after areas, have now surpassed that value. As a result, homeowners who may not consider their homes “mansions” could still be liable.

The surcharge will apply to your property if its value exceeds £2 million. The government’s Valuation Office Agency (VOA) will carry out a detailed review of home values to determine which properties exceed the threshold. The review will start in 2026, and homes close to the threshold could enter the new tax band as their value appreciates.

Read our detailed guide on the impact of mansion tax on UK property values and homeowners, and what the change means for future property prices.

How Will It Be Collected?

The mansion tax will be collected alongside regular council tax. Local authorities will collect the surcharge and send it to the government. This model aligns with the Making Tax Digital (MTD) framework, which the UK is rolling out for other taxes.

Homeowners will receive an updated tax bill in April 2028 and must make payments along with their regular council tax fees. No exemption exists for primary residences, although some properties may qualify for a deferment scheme if owners cannot afford the payment.

Learn more about how the mansion tax is impacting the prime property market in the UK and what it means for property investors.

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Why Is It Being Introduced?

The Labour government has defended this surcharge as part of a broader effort to address wealth inequality and redistribute resources. The mansion tax aims to target the wealthiest homeowners, particularly in the South East where housing costs are disproportionately high. Critics argue that the tax unfairly burdens property owners who may not have significant income but own high-value assets.

According to Jonathan Russell, the CEO of the VOA, the measure will affect around 200,000 homes, especially in areas like central London. The government argues that this new tax will help balance the burden of taxes across the UK and allow local councils to provide better services to the wider population.

How We Help Property Owners Navigate Reeves Mansion Tax in UK

Apex Accountants specialises in helping property owners navigate complex tax systems, like the High Value Council Tax Surcharge. Our services include:

• Property tax planning and advice
• Valuation of high-value assets
• Help with managing property portfolios
• Tax-efficient strategies for high-net-worth individuals
• Compliance with new property tax rules

If you own property that may be affected by this new surcharge, reach out to us today, and we will help you prepare.

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Call Anytime 0203 883 4777

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Conclusion

The mansion tax, officially called the High Value Council Tax Surcharge, will affect homes worth over £2 million starting in 2028. While the policy targets wealthy property owners, many middle-income individuals with high-value homes will also feel the impact. Homeowners should review their properties now to prepare for the potential increase in tax costs. At Apex Accountants, we provide expert advice to help you navigate this new tax and make informed decisions about your property portfolio.

Let us assist you in managing these changes efficiently. Reach out today to learn more about how this new tax will affect you and how we can support you through it.

Common Questions About the Mansion Tax Updates

1. How will the mansion tax impact me if I own a home worth just above £2 million?

If your home is valued just above £2 million, you will be liable for the surcharge. If your property value is near this threshold, it is important to check its current valuation and plan accordingly.

2. Will this tax apply to second homes or rental properties?

Yes, the mansion tax applies to any residential property worth more than £2 million, regardless of whether it is your primary residence or a second home.

3. Will the tax be adjusted for inflation?

Yes, the surcharge will be uprated with inflation starting in 2029, meaning that the tax will increase annually based on the consumer price index (CPI).

4. Are there any exemptions or reliefs available?

Currently, there are no automatic exemptions. However, the government may offer relief schemes for certain property owners who face financial hardship or have difficulty paying the surcharge.

5. What can property owners do to prepare?

Homeowners should:

• Check the value of their properties regularly to monitor whether they will fall into the taxable range.
• Consult a tax advisor to explore ways to minimise the impact of the surcharge.

Review their finances to ensure they are prepared for the additional tax burden starting in 2028.