Rachel Reeves is said to be preparing to introduce a new council tax surcharge on properties valued over £2 million as part of her upcoming Budget. The proposed measure, often referred to as a “mansion tax,” is expected to impact over 100,000 of the most expensive homes.
Initially, there were reports that the Chancellor was considering a threshold of £1.5 million, affecting around 300,000 households. However, it is now believed that the threshold has been raised to £2 million to avoid burdening families deemed “asset-rich, cash poor.”
In England, council tax is categorized into bands determined by property values from April 1991. The Chancellor is reportedly planning to reassess approximately 2.4 million properties in the higher bands F, G, and H to identify those subject to the additional charge.
According to The Times, individuals may have the option to defer payment of the tax until they sell their home or pass away. The Treasury has not officially commented on any Budget-related speculations.
Council tax in England is allocated into bands based on property values from 1991. For the 2025-2026 fiscal year, the average Band D council tax stands at £2,280 in England, with different bandings in Scotland and Wales.
The government is currently seeking feedback on proposals to extend council tax payments over 12 months instead of the current ten-month period. While households can still opt for ten monthly payments, the new plan may make 12-month payments the default.
Households paying over 12 months could potentially save around £38 monthly, based on estimates from the Ministry of Housing, Communities and Local Government. The consultation also includes suggestions to slow down debt collection processes for missed council tax payments.
Individuals can inquire with their local council about eligibility for council tax discounts, such as a 25% reduction for single occupancy or 50% off if all residents are exempt from paying. Low-income households or benefit recipients may qualify for Council Tax Support or Reduction schemes, potentially securing full bill exemptions.
Lastly, homeowners are encouraged to investigate if their council tax band is accurate. Being in a higher band than warranted could result in significant refunds and lower future bills, while being in a lower band could lead to increased future payments.
