High Value Council Tax Surcharge focuses on the Super Prime market in England

6th February 2026 | Caroline Vernon | Residential Property, UK Property Market, Renter's Rights Act 2025

The Chancellor has introduced another tax on property (November 2025 budget). This could have a detrimental effect on the high-end property market, where taxes have increased overall.

From April 2028, a new tax will be levied on property owners, being the High Value Council Tax Surcharge (HVCTS). The rates are:

Threshold (£m)	Rate (£m)
£2.0-2.5	£2,500
£2.5-3.5	£3,500
£3.5-5	£5,000
£5+	£7,500

The HVCTS can be viewed as a second council tax payment which will be levied on owners of properties valued at £2 million or more. It will be collected much like council tax by Local authorities.

A public consultation should take place early this year, to work out how to bring the new tax in. There are currently no details on how the Valuation Office will calculate whether a property is valued at £2 million or over. It makes sense that the Valuation Office will review properties currently in Council Tax bands F, G and H. Revaluations will be carried out every five years, catching more properties over time. The HVCTS rate could also increase with CPI inflation each year.

The Government will provide exemptions, which could include those who may struggle to pay the tax, for example pensioners who have no provisions to cover a new annual tax, or the owners of historic houses who are asset rich but cash poor, and employee occupiers.

The consultation will also need to address how the surcharge applies to properties held through complex ownership structures such as trusts, companies, or partnerships which are often used for succession planning, asset protection, or tax efficiency.

Most properties valued over £2 million are currently located in London and the Southeast, so prospective buyers looking in these areas will need to factor in this additional annual cost. Therefore, it could encourage buyers to search in a wider geographical area.

Prior to implementation we will likely see price bunching just below the thresholds and this may happen every five years when the revaluations are carried out.

For those moving home or for first-time buyers in the £2–£5 million bracket there may be some initial caution as the new tax is factored into purchasing decisions.  The surcharge may prompt negotiation on price to offset the annual charge.

For investors, this represents yet another cost since they are already facing higher property income tax from April 2027 and their freedom to deal with their properties is being restricted by the Renters Rights’ Act 2025.

Whilst the new tax may be a consideration for some buyers, it could also create opportunities particularly if prices become more competitive as a result.

One hopes that the tax is not significant enough to lead to widespread price drops or a surge in owners selling up. However it is possible that we could see a reverse in the policy decision where there are falling values.

 

To find out more contact Caroline Vernon or the Residential Real Estate team.