Chancellor Rachel Reeves has announced a new 'mansion tax' that will impose a significant annual surcharge on the owners of high-value residential properties across England and Wales. The policy, formally known as the High Value Council Tax Surcharge, is designed to address perceived imbalances in the current council tax system.
Which Areas Face the Heaviest Mansion Tax Burden?
The new levy will specifically target homes valued at more than £2 million. According to an exclusive analysis of Land Registry data by the Reach Data Unit, a total of more than 26,500 homes have been sold at or above this threshold since the start of 2020, indicating the scale of the policy's impact.
The distribution of these properties is heavily concentrated in the capital. More than two-thirds (67%) of all homes sold for over £2 million in the last five years are located in London.
Westminster is the local authority with the highest number, accounting for 14% of the national total with 3,832 properties. It is closely followed by Kensington and Chelsea with 3,525 homes, representing around 13% of all affected properties in England and Wales.
Other London boroughs feature prominently on the list:
- Camden: 1,482 homes (6%)
- Wandsworth: 1,412 homes (5%)
- Hammersmith and Fulham: 1,212 homes (5%)
- Richmond upon Thames: 1,068 homes (4%)
Mansion Tax Hotspots Outside the Capital
While London dominates, the analysis reveals that wealthy enclaves outside the capital will also be significantly affected. Elmbridge in Surrey leads the way with 939 high-value homes.
Beyond the Home Counties, Bournemouth, Christchurch and Poole top the list with 241 properties, while Cheshire East has the highest number in the North of England with 183 homes above the £2 million mark.
How the New Mansion Tax Will Work
The Treasury states the new surcharge aims to inject greater fairness into the Council Tax system. It highlighted that the current average Band D bill in England is £2,280, which is £250 more per year than the Band H charge for a £10 million property in Mayfair, City of Westminster.
The High Value Council Tax Surcharge will be introduced from April 2028. The Valuation Office Agency will conduct a targeted exercise to identify properties valued above £2 million, making them liable for the new charge.
The surcharge will be applied in addition to existing council tax bills and is structured into four bands:
- Homes valued between £2 million and £2.5 million: £2,500 per year
- Properties worth £2.5 million to £3.5 million: £3,500 per year
- Homes valued from £3.5 million to £5 million: £5,000 per year
- Properties over £5 million: £7,500 per year
Starting from the 2029-30 financial year, these surcharge amounts will increase annually in line with CPI inflation.
