Rachel Reeves is said to be considering the introduction of a new council tax surcharge on properties valued over £2 million as part of the upcoming Budget. This proposed “mansion tax” is expected to impact over 100,000 of the most expensive homes.
Initially, there were reports that the Chancellor was aiming for a £1.5 million threshold, which would have affected 300,000 households. However, it is now believed that the threshold has been raised to £2 million to prevent putting a financial burden on “asset-rich, cash poor” families.
In England, council tax is categorized into bands based on property values from April 1991. The Chancellor is reportedly planning to reassess approximately 2.4 million high-value Band F, G, and H homes to determine the applicability of the surcharge.
According to The Times, individuals may have the option to delay paying the tax until they sell their property or pass away. The Treasury has not provided any official statements regarding the Budget speculation.
Council tax bands in England are determined by property values from April 1991. The average Band D council tax for the 2025-2026 financial year in England is £2,280, with Scotland and Wales having different band structures.
Currently, the government is seeking feedback on proposals to extend council tax payment periods from ten to twelve months. While households can still opt for ten monthly payments, the new plan suggests defaulting to twelve monthly payments, potentially reducing monthly payments for an average Band D household by around £38.
Additionally, the consultation includes suggestions to slow down the debt recovery process for missed council tax payments and offers advice on potential discounts. Individuals living alone can receive a 25% discount on their bill, while those exempt from paying council tax can get a 50% discount.
Those receiving benefits or with low incomes are encouraged to explore Council Tax Support or Reduction schemes offered by local authorities, as they may qualify for full bill exemptions. Furthermore, homeowners are advised to check if they can challenge their council tax band, which could result in refunds and lower bills, but caution is advised to avoid unintentionally increasing future bills.
Overall, these proposed changes aim to bring transparency and fairness to the council tax system, providing relief for those in need and ensuring appropriate taxation for high-value properties.