Thousands of UK homes are set to be subject to a new tax. Dubbed the “Mansion Tax”, the High Value Council Tax Surcharge will be introduced on homes worth over £2million in 2028, after the Chancellor, Rachel Reeves, announced the levy in her Budget on November 26. Annual charges of £2,500 to £7,500 will be rolled out, depending on a property’s value band, and collected alongside council tax.

It is believed that valuations will likely be based on April 2026 market values. Separately, property income tax rates will rise from April 2027. Paula Higgins, CEO of HomeOwners Alliance, expressed concern that this could just be the start. She said: “It’s clear the Government wants higher-value homes to contribute more. We’ll wait to hear further details about how the mansion tax will be set up in the planned public consultation in early 2026.

“We’re sceptical about whether the revaluation needed for this mansion tax can be delivered cleanly and on time.

Ms Higgins added: “Another key concern for homeowners is whether this is the thin end of the wedge? Once measures are introduced, they have a habit of being extended or thresholds not being updated, and more people end up paying tax as a result.”

The expert suggested that Ms Reeves could have underestimated the impact of her policy.

Ms Higgins said: “This mansion tax could quickly become relevant for more homeowners than the Chancellor anticipates.

“We expect these arbitrary thresholds of a mansion tax will distort the market, which OBR has recognised will cause bunching of sales just below the thresholds.”

The Chancellor said during her Budget speech that the new surcharge will raise over £400million by 2031, and will be charged on less than the top 1% of properties.

The Office for Budget Responsibility forecasted that the Mansion Tax will affect 165,000 homes.

The Budget document added: “Local authorities will collect this revenue on behalf of central government and will be fully compensated for the additional costs of administering this new tax.

“Revenue will be used to support funding for local services, with further consideration through the next spending review in 2027.

“The Government will consult on detailed implementation of the HVCTS in the new year, including to determine who might need additional support to pay the charge and how to deliver it.”