Chancellor Rachel Reeves has confirmed plans to impose a mansion tax surcharge on about 100,000 of the most valuable homes in England from April 2028, raising an estimated £400 million a year. The measure, announced in last week's Budget, will involve revaluing around 2.4 million properties to create four new price bands above £2 million.
Under the scheme, homes valued between £2 million and £2.5 million will attract an annual surcharge of £2,500, rising to £7,500 for properties worth £5 million or more. The surcharge will be levied on top of existing council tax bills and paid directly to the Treasury. The revaluation, the first since 1991, aims to address the regressive nature of the current council tax banding system.
Previous attempts to introduce a mansion tax have proved politically toxic. The Liberal Democrats proposed a similar levy before the 2010 election but abandoned it during the coalition government. Ed Miliband backed a £30,000-a-year tax on homes over £2 million in 2013, but the idea was widely seen as electoral suicide after both Labour and the Lib Dems lost heavily in 2015.
Reeves’s plan has been described by the Institute for Fiscal Studies as a 'baby step', but supporters argue it offers a more sophisticated framework that can be expanded in future. Property owners fear both higher taxes and potential falls in home values, though the Chancellor has faced little immediate resistance to the measure.
