The Government is introducing a High-Value Property Tax, formally called the High Value Council Tax Surcharge. It applies to residential properties in England valued at £2 million or more.
A nationwide valuation of all affected properties will take place in 2026, and the tax will begin from April 2028. This taxation will be charged to owners of these properties and will sit on top of normal Council Tax.
Who will be affected?
The new High-Value Property Tax will likely impact:
- Individuals owning homes valued at £2 million+
- Owners of second homes, pieds-à-terre, holiday homes at £2million+
- Buy-to-lets meeting the £2 million+ threshold
- Properties owned by companies, partnerships or trusts (subject to consultation, but expected to be included)
Excluded / likely excluded:
- Social housing
- Tenants (occupiers) — liability sits with the owner
Unclear until consultation:
- Properties held in complex ownership structures
- ‘Tied’ properties (employment-linked homes)
- Hardship cases or low-income, asset-rich owners
- How inherited properties will be treated
- The Government have indicated that the consultation will start in “early 2026” with no guidance yet of the duration
How the tax bands work
Your property will be placed into one of four bands based on a 2026 valuation as follows:
| Property valuation | Annual surcharge |
|---|---|
| £2.0m – £2.5m | £2,500 |
| £2.5m – £3.5m | £3,500 |
| £3.5m – £5.0m | £5,000 |
| £5.0m+ | £7,500 |
From 2029 onwards, the surcharge will increase in line with inflation.
Practical effect:
Even at the lowest level, this represents a meaningful recurring annual cost. For owners of multiple properties, the charges stack as they are applied per property.
How valuations will work
The Valuation Office Agency (VOA) will carry out a special valuation in 2026. Key points to consider during this time are:
- You cannot rely on historic sale price or current Council Tax band to predict the new valuation
- Market changes by 2026 may pull borderline properties into scope, so you may find yourself within the value band unexpectedly
- Properties may be re-valued every five years, meaning the charge could increase over time
Key risks and implications for property owners
Ongoing annual cost
The ongoing annual cost will be the main concern as the surcharge is effectively a new annual property tax on top of all existing outgoings. Within your financial plan, you should now factor in:
- Income sufficiency to cover the cost of this new charge
- Whether rental income (if applicable) covers both the surcharge and any financing costs
- Cash-flow planning if on fixed or reduced income
Impact on property values and saleability
There is reasonable expectation that going forward, properties just above the £2m price may see softer demand, and that buyers may use the surcharge as a negotiation point to reduce the price of a property.
Liquidity at the higher end could also become more restricted, especially during market downturns.
Ownership structure review
Clients with property owned in companies or trusts should check:
- Whether those structures offer any relief
- Whether they create additional compliance or tax exposure
- Whether restructuring before the 2026 valuation might be beneficial
Estate planning considerations
Those planning to pass property to children or to sell in the medium term should consider whether to accelerate plans ahead of the 2028 implementation, and to gift or restructure ownership now to avoid future annual charges.
Multiple properties
Clients with several high-value homes will see annual charges multiply. This may influence:
- Which property is retained as the main home
- Whether to offload low-use assets
- How much time is spent in the UK (for internationally mobile clients)
What we don’t yet know
The Government state that they will run a consultation in “early 2026”. The outstanding issues include:
- Whether there will be reliefs for low-income or long-term owner-occupiers
- The rules for complex ownership (trusts, partnerships, corporate structures)
- Whether agricultural/residential mixed-use land might be treated differently
- Transitional rules for properties sold or transferred between valuation and implementation
- Whether valuations can be appealed and on what basis
Planner guidance
Although the tax charge does not begin until 2028, the valuation review will happen in 2026, so planning now for this is key.
For many property owners of the affected values of the new “Mansion Tax”, the additional costs, whilst undesirable, should be affordable due to other aspects of wealth. However, this is not always going to be the case, particularly for those who have owned property for a significant matter of time and their wealth is significantly tied to that property. London particularly, where a two-bedroom flat in a central location, could fall into the chargeable remit.
Income and expenditure analysis should be done to confirm the affordability of this new cost, and accounted for in future planning and budgets. If deemed unaffordable, options such as moving/down valuing, restructuring home by splitting into two properties or renting out any spare rooms in the property.
Equity release is a lifetime mortgage that provides access to equity in the home. The rates are generally expensive but can be a consideration for those older homeowners who wish to stay in the home but are struggling with affordability.
Property as an investment:
Where property ownership is an investment, the effectiveness of this will need to be readdressed – taking into account the new cost of the tax and the potential for more limited high value property demand created by it.
Property owners have already taken hits through mortgage costs becoming a basic rate tax credit from 2017-2019, and second property Stamp Duty surcharge rates from 2016. Combined with higher mortgages costs now that we’re no longer in the historic low environment for interest rates, property owners need to carefully weigh up the benefits of property ownership vs investment portfolios.
Your financial planner can take you through the costs and benefits of both, taking into account Capital Gains Tax considerations of restructuring out of property and building both scenarios into your cashflow model for your personal circumstances.
Recommended next steps
1. Assess likely valuation
A preliminary valuation (even informal) helps determine whether your property is likely to be caught. If your property is around £1.8m–£2.2m, you are in the “risk zone.”
2. Review ownership structure
Discuss with your solicitor and accountant whether:
- Owning through a company or trust creates benefits or downsides
- Simplifying ownership ahead of 2026 is advisable
- Any changes could affect Stamp Duty Land Tax, Capital Gains Tax or Inheritance Tax
3. Consider cash-flow impact
If you anticipate liquidity issues, early planning (downsizing, restructuring, rental decisions) may avoid pressure in 2028.
4. Monitor the consultation
Keep an eye on updates as rules are confirmed. We endeavour to keep you up to date with the latest changes.
In summary
The High-Value Property Tax introduces a new annual levy on residential property over £2 million, with charges ranging from £2,500 to £7,500 per year.
Although implementation is not until 2028, the 2026 valuation is decisive, so clients should review their position over the next 12–18 months.
For many owners it will be a manageable but noticeable extra cost; for others – particularly with multiple high-value properties or limited income, it may influence whether they retain, restructure or sell the property.
Speaking to professionals and mapping out how this could impact you financially is important, and our team are here to help.
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only. This communication does not constitute financial advice. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner to take into account your particular investment objectives, financial situation and individual needs.
The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
Please note
Tax treatment depends upon individual circumstances and is based on current UK tax legislation, that is subject to change at any time.
Past performance is no guarantee of future performance.
The value of an investment and the income from it can fall as well as rise and investors may get back less than they invested. Your capital is therefore always at risk. It should be noted that stock market investing is intended for the longer term.
