By Annabel Dixon, For Country Life.

Published November 2025

The worst-kept secret of the Rachel Reeves Budget last week (and that is really saying something) was the new Mansion Tax. The 'High Value Council Tax Surcharge' — to give its full and proper name — comes in to force from April 2028, after which the owners of houses valued at £2 million or above-plus homes will need to fork out thousands of pounds more each year on top of existing council tax. The annual charge will range from £2,500 for homes between £2 million and £2.5 million, to £7,500 for £5 million-plus homes.

Treasury estimates show that around 160,000 homes in England — fewer than 1% of the total — will be above the £2 million threshold, though more homeowners could be hit as time marches on. Revaluations will be carried out every five years, and analysis in The Daily Telegraph suggests that around 30,000 more homeowners could be in the £2 million-plus bracket in the next three years as a result of house price growth.

The number of homes affected in London and the South-East dwarfs the figure elsewhere around the country, as our analysis last week showed. Around 125,000 homes in London and 20,000 in the Home Counties are expected to be hit by the charge, and that trend won't change as values rise.

Tom Bill, Head of UK Residential Research at Knight Frank, explains: ‘Over time, more properties will get dragged into the mansion tax net, which means the proportion of terraced houses, flats and semi-detached homes will grow, particularly in the capital.’

The new levy is unlikely to put off wealthy homeowners, for whom the cost will be a drop in the ocean. Harry Dawes, of buying agency Dawes London, which operates in the rarefied prime central London market, says: ‘I think there will be some that are not in the position, from a liquidity perspective, to be able to cover another £2,500 bill, but I think they will be in the vast minority.’ In his view, it will have more of an impact on the needs-based country market.