HM Treasury has confirmed that owners of residential property in England worth £2 million or more will pay a new High Value Council Tax Surcharge from April 2028, with annual bills ranging from £2,500 to £7,500 depending on value band.
The detail arrived in updated guidance and a full consultation response published on 28 October alongside Chancellor John Healey’s Autumn Budget. The threshold stays at £2 million based on 2026 values despite pre-Budget speculation it could drop to £1.5 million, while an appeals process is still being designed and will follow in regulations.
Owners of high-value lets, concentrated in London and the South East, now have around 16 months before the charge bites on top of existing council tax and higher tax on property income confirmed in the same Budget. The Valuation Office Agency will run a targeted valuation exercise to find homes in scope, which the Government puts at fewer than 1 percent of properties in England.
What owners will pay from 2028
The surcharge sits alongside normal council tax and falls on owners rather than occupiers. It is expected to raise about £400 million a year from 2028/29 to support local services, with charges rising in line with CPI inflation each year from 2029/30.
Four bands apply. Homes valued at £2 million to £2.5 million will pay £2,500 a year, homes at £2.5 million to £3.5 million will pay £3,500, homes at £3.5 million to £5 million will pay £5,000, and homes above £5 million will pay £7,500. Local authorities will bill and collect the money on behalf of central government and will be compensated for extra administration costs after a new burdens assessment.
The guidance frames the move as a correction to 1991-based council tax bands. It notes that a Band D home in Darlington or Blackpool worth about £400,000 today can pay £2,400 to £2,600 a year, while a Band H home in Mayfair worth £10 million pays around £2,100. This follows Landlord Knowledge’s October report on the expected mansion tax threshold holding at £2 million, which found one in 10 London homes would otherwise have been pulled into scope at a lower threshold. The confirmed £2 million line keeps the net narrower than many landlords had feared this month.
Deferrals, exemptions and penalties
A deferral scheme will be open to homeowners with annual household income of £35,000 or less, capital savings of £16,000 or less, or where a member of the household meets set disability criteria. Payment can wait until ownership changes or until the taxpayer chooses to settle, with any interest terms to be set in later regulations.
Exemptions cover purpose-built student halls, care homes, long-stay hospital accommodation and hospices, as well as barracks owned mainly for armed forces accommodation. Homes owned by a sovereign nation for diplomats and property used mainly to house people seeking refuge from domestic violence are also exempt. Discounts will apply to farmhouses and associated farmworker homes on working farms and to property held for charitable purposes.
Enforcement carries weight. Owners who fail to supply valuation information within 21 days of a request face a penalty of 10 percent of the annual liability, rising to 30 percent if the information is still missing after a further 21 days. Councils will be allowed to contact residents, managing agents or others they think can help identify an owner, though those third parties will not face penalties for not cooperating. That contact power is directly relevant to letting agents and managers of high-value lets, who may receive identification requests during the valuation exercise.
Nigel Bishop, director at buying agency Recoco Property Search, told PropertyWire the threshold decision will still cool bidding near the line. “The tax will result in buyers thinking twice before putting in an offer on properties near or over the £2million mark, resulting in properties sitting on the market for longer,” he said. His warning sits alongside yesterday’s Budget confirmation of a further two-point rise in tax on property income from April 2027, which added £400 a year to the bill on £20,000 of taxable profit for a basic-rate landlord. High-value landlords now face two layered tax rises within 12 months of each other.
What this means for landlords
- If you own at or near £2 million in 2026 values: check current valuations now and track the Valuation Office Agency exercise, as 2026 values fix scope even if prices move before 2028.
- Watch for: the appeals process and interest rules for deferrals, still to be set in regulations, plus confirmation of how jointly held and company-held homes are billed.
- Bottom line: budget £2,500 to £7,500 a year per qualifying home from April 2028 on top of council tax, and price any purchase near the threshold with slower resale in mind.
Editor’s view
Holding the line at £2 million avoids the worst-case outcome for landlords, but the direction is clear. High-value rental stock now carries a fixed annual surcharge plus higher income tax, and councils can come knocking via agents to establish ownership. Landlords in scope should use the 16-month window to review valuations, structures and exit pricing rather than wait for the first bill.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 29 October 2026
Sources: HM Treasury, Valuation Office Agency
Related reading: Yopa: mansion tax U-turn spares 1 in 10 London homes
