Rachel Reeves is said to be preparing to introduce a new council tax surcharge on homes valued above £2 million as part of her upcoming Budget. This proposed levy, commonly referred to as a “mansion tax,” is expected to impact more than 100,000 of the most expensive residential properties.
Initially, there were reports that the Chancellor was considering a threshold of £1.5 million, which would have affected around 300,000 households. However, it is now suggested that the threshold has been raised to £2 million to prevent imposing financial strain on families deemed “asset-rich, cash poor.”
In England, council tax is categorized into bands determined by property values from April 1991. It is anticipated that the Chancellor is contemplating revaluing approximately 2.4 million of the most expensive band F, G, and H homes to identify those subject to the additional charge.
According to The Times, individuals may be allowed to postpone payment of the tax until they either relocate or pass away. The Treasury has refrained from commenting on any speculation surrounding the Budget.
Households in England are currently paying an average Band D council tax of £2,280 for the fiscal year 2025-2026. Scotland and Wales have their own distinct council tax banding systems. The government is in the process of seeking opinions on proposals to extend council tax payment schedules from ten to twelve months.
Under the new plans, the default payment schedule will be extended to twelve months, offering smaller monthly payments. The average band D household could reduce their monthly payment by approximately £38, based on data from the Ministry of Housing, Communities and Local Government.
While the option to pay over ten months will still be available, the consultation also suggests a slower debt collection process for instances of missed council tax payments. Residents are encouraged to inquire with their local council about potential council tax discounts or support schemes based on individual circumstances, such as living alone, having a low income, or claiming benefits.
Moreover, homeowners are advised to check if they are eligible to challenge their council tax band, as being in an incorrectly high band could result in refunds and lower future bills. However, it is crucial to conduct thorough research beforehand, as being in a lower band than warranted may lead to increased future payments.