London, November 28, 2025
England will introduce a new mansion tax from April 2028, imposing a council tax surcharge on residential properties valued at £2 million or more. This tax targets owners of high-value properties, aiming to reshape the property taxation landscape as announced in the Autumn Budget 2025.
Details of the Mansion Tax
The new surcharge will apply exclusively to properties in England valued at £2 million and above, marking the introduction of a significant tax on the ownership of expensive residential real estate. The tax implements a tiered banding structure rather than a simple proportional rate, differing from earlier proposals.
Property owners with homes valued between £2 million and £2.5 million will face a flat annual surcharge of £2,500. Higher bands will impose increasing charges up to a maximum surcharge of £7,500 for properties worth £5 million or more. The exact amounts for mid-tier bands (£2.5m–£3m and £3m–£5m) have not been fully detailed as of yet.
Importantly, the tax is levied on property owners, irrespective of occupancy, making it distinct from council tax which typically targets occupiers.
Implementation and Future Consultations
Set to commence from April 2028, the government provides advance notice to property owners. In early 2026, a consultation process will further clarify the policy framework, addressing critical issues such as potential reliefs and exemptions. A particular focus will be on how the tax applies to properties held through Special Purpose Vehicles (SPVs), a common structure used in high-value property ownership.
This consultation will shape final implementation details and ensure the policy responds to practical concerns and fairness considerations.
Market Implications
Analysts anticipate the mansion tax will exert a “ceiling effect” on property values just below the £2 million threshold. This phenomenon mirrors previous market behaviours observed following Stamp Duty reforms, where buyers often refrained from bidding beyond the tax thresholds to avoid additional charges.
Consequently, sellers of properties approaching or exceeding £2 million might reduce asking prices to remain just under the surcharge trigger point, potentially prompting a clustering of listings around this value.
Background and Policy Shift
The mansion tax was introduced as part of the Autumn Budget 2025 and represents a strategic shift in taxing luxury residential properties. Initially, a 1% annual proportional tax on property values exceeding £2 million was proposed but later replaced by the current tiered flat-rate surcharge model.
This reform signals the government’s intention to enforce a more straightforward, predictable tax on high-end residential property ownership, differentiating it from property transaction taxes and council tax obligations.
As the policy unfolds, its impact on the English residential property market will be closely monitored, particularly regarding pricing strategies, ownership structures, and market liquidity among the ultra-high-value segment. The upcoming consultation process in 2026 will be pivotal in refining the tax’s scope and mitigating unintended economic effects.