What is the mansion tax, and how much will it cost owners of high-value homes?
During the 2025 Autumn Budget, a ‘mansion tax’ was announced. We explore what the mansion tax is, why it’s being introduced, and how much it’ll cost those affected.
There were many announcements in the 2025 Autumn Budget, including tax changes and new policies, such as the mansion tax.
We explore what you need to know about this upcoming new policy.
The mansion tax will affect homeowners with properties worth £2 million or more.
The tax will be charged on top of council tax and range from £2,500 to £7,500 a year.
Unbiased can match you with a qualified financial adviser or mortgage broker.
What is the mansion tax, and why is it being introduced?
In the 2025 Autumn Budget, chancellor Rachel Reeves announced that the UK government will introduce a high value council tax surcharge, also known as the mansion tax.
This new tax, introduced from April 2028, is intended to get high value properties valued at £2 million or more in England to contribute more.
HM Treasury says that, currently, the average band D property, valued between £68,001 and £88,000, pays £250 more in council tax than a £10 million property in Westminster (under band H).
The surcharge will be based on targeted valuations of homes (based on 2026 prices) to identify properties above the £2 million threshold and will be paid on top of the existing council tax.
The charge will also rise in line with inflation each year.
Who will be affected?
According to the government, less than 1% of properties will pay the high value council tax surcharge, which is expected to raise £400 million by 2029/30.
Local authorities will collect the mansion tax on behalf of the central government, with the money being used to fund local government services.
According to official Budget documents, there will be more details on how the revenue from the mansion tax will be spent in the next spending review.
The government has yet to reveal how the mansion tax will be implemented and if there will be any reliefs or exemptions, but says it will consult on this.
How much will the mansion tax cost?
How much a homeowner pays under the high value council tax surcharge depends on the value of their property.
The annual charges are:
£2,500 for properties valued between £2 million and £2.5 million
£3,500 for properties valued between £2.5 million and £3.5 million
£5,000 for properties valued between £3.5 million and £5 million
£7,500 for properties valued over £5 million
What is the expected impact of the mansion tax?
There has been much speculation about the impact of the mansion tax, which is expected to affect homeowners mainly in London, the South East, and the East of England.
Impact on property prices and sales
Some estate agents have warned that homeowners hoping to sell may agree to asking prices below the property bands above, known as ‘price bunching.’
This could affect how much the government raises, especially if many homes are valued at under £2 million, even if it is only by a small amount.
Another potential impact of the mansion tax is that it could incentivise older homeowners to downsize, according to Savills.
Criticisms of the policy
The policy has been criticised by the Institute for Fiscal Studies (IFS) as not going far enough. It argues that all council tax bands should be revalued, as they haven’t been revisited since 1991.
This has led to some homeowners paying council tax bills that are disproportionately small compared to their property’s value, while homeowners in other areas of the country are paying more council tax for lower-value properties.
If council tax bands are revalued, it could result in higher council tax bills, as house prices have soared since 1991.
Get expert financial advice
If you’re worried about the potential impact of the high value council tax surcharge, it may be worth considering qualified financial advice.
A financial adviser can look at your unique circumstances and long-term goals to recommend the best course of action for you.
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