London, November 30, 2025
The UK government has announced a new High Value Council Tax Surcharge targeting residential properties valued over £2 million in England, set to begin in April 2028 to generate revenue for the NHS and local services. Chancellor Rachel Reeves unveiled the policy during the Budget 2025 announcement on November 26.
Tax Threshold and Revenue Projections
The surcharge, commonly referred to as a mansion tax, applies to homes exceeding a £2 million valuation. The government expects it to affect over 100,000 households, primarily in affluent areas. Projected revenue from this measure is estimated at £0.4 billion annually by the 2029-30 fiscal year, earmarked to support local services and central funding priorities including the National Health Service.
Implementation and Collection Process
Rather than establishing a standalone tax system, the surcharge will be integrated into existing council tax frameworks. Local authorities will collect the additional payments on behalf of central government and receive full reimbursement for administrative expenses. Property valuations will utilize HM Revenue & Customs data alongside Land Registry records, with appeal processes mirroring current council tax dispute procedures. The surcharge is scheduled for implementation starting April 2028, allowing time for orderly rollout.
Geographic Impact
Affluent regions will bear the brunt of this policy. Approximately half of all properties in England valued above £2 million are located in London, with 85% in the South East. This concentration highlights the uneven distribution of ultra-high-value residential properties.
Design and Policy Considerations
The government revised the threshold upwards from an earlier proposal of £1.5 million to reduce the tax’s reach among middle-class professionals, addressing concerns about political and market backlash. The policy avoids a comprehensive revaluation of council tax bands by leveraging existing infrastructure to capture accurate market values frozen since 1991. A public consultation slated for early 2026 will solicit input on reliefs, exemptions, appeals procedures, and provisions for those who may face payment difficulties. The Office for Budget Responsibility assumes current council tax exemptions will largely remain applicable.
Political and Fiscal Context
This tax measure underscores the Labour government’s commitment to progressive fiscal policy following their 2024 election win. Ministerial decisions reflect a calibrated approach—balancing revenue needs with sensitivity to middle-class voter concerns and property market stability. The delayed implementation and consultation phase demonstrate practical governance aimed at minimizing disruption while addressing public service funding gaps.
The forthcoming consultations expected in 2026 will shape final policy details and operational frameworks, positioning the government to refine implementation ahead of the 2028 launch. This initiative marks a significant step in the UK’s fiscal strategy, aiming to mobilize wealth from high-value property holdings toward broader social and economic priorities.