As many as 165,000 homes could be hit by the government’s mansion tax in the policy’s first year, according to estimates from the Office for Budget Responsibility (OBR). The high-value council tax surcharge, set to take effect in 2028, will apply to properties valued at more than £2 million.
The OBR’s forecast shows the number of affected properties rising to 167,000 by 2030, an increase from earlier estimates of around 120,000. However, the watchdog also predicted that 20 per cent of homeowners could appeal against their re-evaluation, with up to 40 per cent of appeals potentially successful due to narrow price bands.
The surcharge will be introduced in four bands, starting at £2,500 annually for properties worth more than £2 million, rising to £7,500 for those exceeding £5 million. A re-evaluation of high-value homes will determine the new tax, which is expected to impact properties across council tax bands F, G, and H.
Shadow housing and local government secretary Sir James Cleverly criticised the tax, saying it “punishes people who have worked hard to provide for their families”. He added: “Under Labour, everyone is paying more council tax. Not content with hiking council tax on an average Band D home by £1,143 across this Parliament, they are now hitting family homes with yet another punishing charge.”
The OBR’s analysis suggested the new tax could lead to fewer expensive homes being built or provide an incentive for owners to split large properties to avoid the charge. However, it noted that similar reforms in Scotland showed no reduction in new property growth rates in higher bands and no evidence of properties splitting.
The government expects the tax to raise more than £400 million in 2029-30, with the Treasury arguing it targets more expensive homes to make the system fairer, as the typical family home currently pays more per year in council tax than a £10 million property in London’s Mayfair.
