Further details are emerging around the government’s proposed High Value Council Tax Surcharge (HVCTS), often referred to as the ‘mansion tax’, with concerns growing over its potential impact on high-value property prices across the UK.
Announced in the Autumn 2025 Budget, the new surcharge is expected to apply to residential properties valued at £2 million or more from April 2028. While the Treasury is yet to publish its formal consultation, the Office for Budget Responsibility (OBR) has already outlined how it believes the tax could affect the property market.
Under current proposals, annual charges could range from £2,500 to £7,500 depending on a property’s value. The OBR believes these future tax costs may begin influencing house prices well before the rules officially come into force.
Matthew Robinson, Senior Tax Manager at Forrester Boyd, said:
“Whenever a new property tax is introduced, the market tends to react early. Buyers and sellers may begin factoring future tax liabilities into negotiations long before the legislation actually takes effect, particularly at the higher end of the market.”
The OBR has suggested that properties just above key thresholds may experience the greatest pricing pressure, as buyers look to avoid falling into a higher surcharge band. Similar trends were previously seen under older stamp duty structures where pricing clustered just below tax thresholds.
There are also expectations that many homeowners will challenge property valuations once the surcharge is introduced, potentially leading to a significant increase in appeals and disputes over market values.
Despite the attention surrounding the proposal, the tax is forecast to raise around £400 million annually by 2028/29, relatively modest in Treasury terms. However, for owners of higher-value properties, the financial impact could still be significant.
With consultations still expected and further details yet to be confirmed, homeowners with valuable property assets may wish to keep future tax planning and estate considerations under review as the government’s approach develops further.
We’ll have to wait and see if the OBR’s expectations pan out. Read more on HVCTS here.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
