A new tax targeting affluent residences in London and the South East is expected to have the most significant impact, but a recent map indicates that the entire country may feel its effects. Properties valued over £2 million will face an additional charge of at least £2,500 starting in 2028, known as the “mansion tax.”
Revealed in Rachel Reeves’ budget, the High Value Council Tax Surcharge will be imposed on top of the existing council tax. The Valuation Office will conduct a specialized valuation exercise to pinpoint properties exceeding £2 million, subjecting them to the new levy.
While the exact number and locations of affected homes remain uncertain, exclusive analysis of Land Registry data by the Reach Data Unit has identified all properties in England and Wales selling for over £2 million in the past five years. Since the beginning of 2020, more than 26,500 homes have been purchased above the mansion tax threshold.
London has seen the majority, with over two-thirds (67%) of homes surpassing the £2 million mark since 2020. Westminster leads with 3,832 such sales in the last five years, constituting 14% of the total nationwide, while Kensington and Chelsea follow closely with 3,525 sales, representing around 13% of the total in England and Wales.
Other notable areas include Camden with 1,482 homes (6%), Wandsworth with 1,412 (5%), Hammersmith and Fulham with 1,212 (5%), and Richmond upon Thames with 1,068 (4%). Outside London, Elmbridge in Surrey boasts the highest number at 939 homes.
Among regions beyond the capital, Bournemouth, Christchurch, and Poole top the list with 241 homes, while Cheshire East leads outside the South with 183. The new tax system aims to enhance equity within the Council Tax structure, as per the Treasury’s objectives.
Currently, the average band D across England stands at £2,280, which the Treasury claims is £250 more annually than the band H charge in the City of Westminster for a £10 million property in Mayfair.
The surcharge will be categorized into five bands, with properties valued between £2 million and £2.5 million facing a yearly fee of £2,500. Homes falling within the £2.5 million to £3.5 million range will pay £3,500 annually, while those valued between £3.5 million and £5 million will incur a charge of £5,000. Properties exceeding £5 million will face a fee of £7,500. These surcharges will be adjusted annually in line with CPI inflation starting from 2029-30.
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