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Georgina CraneSenior Associate
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Government Introduces ‘Mansion Tax’ Surcharge on Properties Over £2m
The Government has unveiled a new High Value Council Tax Surcharge—widely viewed as a mini wealth tax—applying to residential properties valued above £2 million. While positioned as a political statement rather than a significant revenue generator, the levy introduces substantial annual charges, rising with CPI inflation, and adds a new layer of complexity for homeowners, investors, and those planning for succession or inheritance tax.
1 minute read
Published 10 December 2025
The Government has announced what could be described as a mini wealth tax, imposing a levy on properties worth over £2m.
These annual charges will be banded in accordance with the property value, as per the below, but will also increase in line with CPI inflation each year.
| £2m – £2.5m | £2,500 |
| £2.5m – £3.5m | £3,500 |
| £3.5m – £5m | £5,000 |
| £5m+ | £7,500 |
The charge will be collected alongside existing Council Tax by local authorities, who will be given additional funding in order to administer the new tax. It will be for the Valuation Office – a not entirely independent body – to identify those properties worth over £2m, but there is no guidance as to how they will do this and what routes of appeal there will be to challenge a valuation decision.
This looks to be more political statement than big earner. The levy is explicitly called a ‘High Value Council Tax Surcharge’ (hence coined a “Mansion Tax”) and so satisfies Labour party supporters and left leaning voters, at a time when Labour is losing its left. However, it will fail to generate a very significant income for the Revenue – the levy is projected to bring in c.£430m each year. This may well be our gentle introduction to increased and more varied wealth taxes over this government’s lifetime.
The High Value Council Tax Surcharge is designed to be affordable, but the government has said there will be support schemes in place “for those who need it most”. Either way, regardless of how small this might seem at first glance, in most circumstances this new levy will increase the existing annual tax on property (vis a vis council tax) by at least 100%.
There may well be the opportunity to defer these charges, and the government will be consulting on reliefs and exemptions in the new year. The consultation will also look at the proposed rules for more complex ownership structures such as companies, funds, trusts and partnerships.
The surcharge may not have a seismic effect on the property market, but will be yet another consideration for individuals looking at their succession planning and inheritance tax liability. Older homeowners may be further incentivised to downsize, in light of a costly annual charge and a continued freeze to inheritance tax thresholds. However, in the short term, we are likely to see a sizeable reduction in value to the properties caught by the new charge.
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Government Introduces ‘Mansion Tax’ Surcharge on Properties Over £2m
The Government has unveiled a new High Value Council Tax Surcharge—widely viewed as a mini wealth tax—applying to residential properties valued above £2 million. While positioned as a political statement rather than a significant revenue generator, the levy introduces substantial annual charges, rising with CPI inflation, and adds a new layer of complexity for homeowners, investors, and those planning for succession or inheritance tax.
Published 10 December 2025
Key Contacts
The Government has announced what could be described as a mini wealth tax, imposing a levy on properties worth over £2m.
These annual charges will be banded in accordance with the property value, as per the below, but will also increase in line with CPI inflation each year.
| £2m – £2.5m | £2,500 |
| £2.5m – £3.5m | £3,500 |
| £3.5m – £5m | £5,000 |
| £5m+ | £7,500 |
The charge will be collected alongside existing Council Tax by local authorities, who will be given additional funding in order to administer the new tax. It will be for the Valuation Office – a not entirely independent body – to identify those properties worth over £2m, but there is no guidance as to how they will do this and what routes of appeal there will be to challenge a valuation decision.
This looks to be more political statement than big earner. The levy is explicitly called a ‘High Value Council Tax Surcharge’ (hence coined a “Mansion Tax”) and so satisfies Labour party supporters and left leaning voters, at a time when Labour is losing its left. However, it will fail to generate a very significant income for the Revenue – the levy is projected to bring in c.£430m each year. This may well be our gentle introduction to increased and more varied wealth taxes over this government’s lifetime.
The High Value Council Tax Surcharge is designed to be affordable, but the government has said there will be support schemes in place “for those who need it most”. Either way, regardless of how small this might seem at first glance, in most circumstances this new levy will increase the existing annual tax on property (vis a vis council tax) by at least 100%.
There may well be the opportunity to defer these charges, and the government will be consulting on reliefs and exemptions in the new year. The consultation will also look at the proposed rules for more complex ownership structures such as companies, funds, trusts and partnerships.
The surcharge may not have a seismic effect on the property market, but will be yet another consideration for individuals looking at their succession planning and inheritance tax liability. Older homeowners may be further incentivised to downsize, in light of a costly annual charge and a continued freeze to inheritance tax thresholds. However, in the short term, we are likely to see a sizeable reduction in value to the properties caught by the new charge.
Key Contacts
- Georgina Crane
Senior Associate
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Article contributor
Georgina
CraneSenior Associate
Specialising in International trusts, tax & estate planning and UK trusts, tax & estate planning
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