Full Breakdown
London Councils Challenge Upcoming “Mansion Tax” on £2 Million-Plus Homes
8/10/2026, 8:27:54 AM
Proposed High-Value Council Tax Surcharge
The government plans to introduce an annual levy on residential properties valued above £2 million, commonly referred to as the “mansion tax.” The surcharge will range from £2,500 to £7,500 per year, depending on the property’s assessed value, and is scheduled to take effect in April 2028. Properties estimated at £2 million-£2.5 million would pay an extra £2,500; those at £2.5 million-£3.5 million, £3,500; £3.5 million-£5 million, £5,000; and properties over £5 million, £7,500.
Background on Council Tax Valuation
Council tax in England is organised into eight valuation bands that were originally based on property values recorded in 1991. Because the existing bands no longer reflect current market values, the Treasury argues the new surcharge will correct “a long-standing unfairness” where a Band D home in some regions pays more tax than a £10 million mansion in Mayfair. To implement the surcharge, HM Revenue & Customs (HMRC) will carry out a targeted valuation exercise to identify properties exceeding the £2 million threshold and assign them to the appropriate new bands.
Financial Impact and Distribution
London’s four wealthiest boroughs—Kensington and Chelsea, Richmond, Wandsworth and Westminster—have warned that they will bear a disproportionate share of the revenue. Council leaders told Chancellor John Healey that 55 % of the projected additional revenue is expected to come from their areas. An unverified estimate suggests about 84,000 homes outside Greater London are valued at £2 million, though the figure has not been confirmed by official valuations.
Official Responses and Council Opposition
A Treasury spokesperson maintains that the surcharge is necessary to address the identified unfairness in the existing system. In contrast, the leaders of the four London councils have formally complained to the government, arguing that the levy will place a heavy burden on their high-value property owners and could have broader implications for local housing markets. The dispute highlights the tension between national fiscal policy objectives and the fiscal pressures faced by affluent London boroughs.
