Homeowners, brace yourselves. From April 2028, yet more bills will be added to the heap. Labour’s “mansion tax” plans mean thousands of property owners will face an extra levy of up to £7,500 a year.
First announced in the 2025 Budget, the measures will affect those with homes valued at more than £2m – fewer than 1pc of residential properties, according to government figures. But, if the payment threshold is left unchanged, even those with modestly priced properties could end up being dragged into paying the surcharge in the future.
Aneisha Beveridge, the head of research at Hamptons, said: “A fixed £2m cut-off today rarely stays put in real terms. Over time, it’s likely to pull in a broader group of homeowners, particularly across London and the South where values are already higher.
“We’ve seen this with other property taxes, where thresholds haven’t kept pace with house price growth, gradually dragging more people living in more modest homes into paying the tax.”
Here, Telegraph Money explains how the new tax is expected to work, who could be affected and whether there will be any deferral periods.
What is the ‘mansion tax’?
Labour’s mansion tax, officially known as the “high value council tax surcharge”, is a new levy on homes valued at more than £2m.
Tim Grimsditch, of financial advice platform Unbiased, said: “Unlike council tax, which is still based on property valuations from 1991, this charge is linked to more up-to-date property values, introducing a more modern and value-driven approach to taxation.”
The charge will be added to existing council tax bills and will be charged to homeowners rather than occupiers or tenants. It will apply whether the property is your main residence, second home or rental property, with payments going to the Treasury rather than local authorities.
Mr Grimsditch added: “At its core, the policy is designed to raise additional revenue from wealth tied up in property, while addressing long-standing imbalances that have seen lower-value homes in some areas pay proportionally more council tax than multi-million-pound properties.”
