If you own a let property in England worth £2 million or more, you will pay a new annual charge from April 2028 on top of council tax, and you cannot make your tenant liable for it. The High Value Council Tax Surcharge falls on the owner, not the occupier, so unlike ordinary council tax it sits with the landlord for the whole tenancy, not just during voids.
What is the high value council tax surcharge?
It is a recurring annual charge on residential property in England valued at £2 million or more, announced at the Autumn Budget on 26 November 2025 and due to start in April 2028 (GOV.UK: High Value Council Tax Surcharge). The press calls it the "mansion tax". Councils will collect it alongside council tax, but the money goes to central government, and the government forecasts it will raise around £430 million a year from 2028-29. Fewer than 1% of homes in England are expected to be caught.
It applies in England only. Scotland and Wales have announced no equivalent charge (as of September 2026).
The design is still being finalised. The government consulted on the detail from 19 May to 14 July 2026 (consultation page) and has not yet published its response, so the points below are the consultation's stated position unless marked otherwise.
How much is the surcharge?
The charge depends on which of four value bands the property falls into, based on its value in 2026:
| Property value (2026) | Annual surcharge | Per month (12 instalments) |
|---|---|---|
| £2m to £2.5m | £2,500 | £208 |
| £2.5m to £3.5m | £3,500 | £292 |
| £3.5m to £5m | £5,000 | £417 |
| Over £5m | £7,500 | £625 |
Three details matter more than the headline numbers:
- The charges rise with CPI every year, so the £2,500 band will cost more than £2,500 within a year or two of launch.
- The bands themselves do not rise automatically. The Valuation Office will revalue every five years, with the next revaluation in 2033, and the consultation says decisions on uprating the £2m threshold will be taken alongside revaluations "and will therefore be for a future government". If prices rise and the threshold does not, more homes fall in.
- There is no taper. A flat valued at £1.99m pays nothing; one valued at £2.01m pays £2,500 a year. The valuation is the whole game near the line.
Bills default to 12 monthly instalments, or 10 on request. The consultation proposes a draft list of in-scope properties in late 2027, first bills in March 2028, and challenges to the Valuation Tribunal for England.
Who pays the surcharge on a let property?
The legal owner pays, never the tenant. The consultation is explicit on how "owner" works:
- Freehold houses: the freeholder is liable.
- Leasehold flats: the leaseholder is liable where the lease was originally granted for more than 21 years. A typical London flat on a 99 or 125-year lease means you, the leaseholder landlord, not the freeholder.
- Joint owners are jointly and severally liable, so the council can pursue either of you for the full amount.
- Companies: where a company owns the property, the company is liable. Holding a prime let in an SPV does not take it out of scope.
- Tenants are not liable at any point, including tenants on the new assured periodic tenancies.
That is a real difference from ordinary council tax, where the tenant pays during the tenancy and you pay only during voids or on HMOs (see who pays council tax, landlord or tenant). With the surcharge you pay 12 months a year, let or empty.
Can landlords defer or avoid it?
No. Deferral is proposed only for an owner's primary residence, for households with income of £35,000 or less or savings of £16,000 or less (or meeting disability criteria), and the consultation states that "deferral will not be available in respect of second homes." A buy-to-let is never your primary residence, so the charge is payable in cash each year.
The proposed exemptions are narrow: registered social housing providers, purpose-built student halls, Ministry of Defence and diplomatic property, care homes, refuges, and new builds held by a developer for up to 12 months. There is nothing for privately rented homes. A standard buy-to-let has no exemption route.
Can I pass the surcharge on to my tenant?
Not as a separate charge, at least not safely. The Tenant Fees Act 2019 bans any payment from a tenant that is not on its permitted list. Council tax is on that list, but the surcharge is a separate charge levied on the owner, and nothing yet confirms it counts as council tax for Tenant Fees Act purposes. Until that is settled, a clause asking the tenant to reimburse it is a risk not worth taking.
The route that is certainly lawful is the rent. Under the Renters' Rights Act you can raise it once a year with a Section 13 notice, and a tribunal can only set the open market rent, capped at your figure (see Section 13 rent increases under the RRA). In prime London, the market sets the rent, not your costs. If comparable flats are not letting for more, you absorb the surcharge.
Is the surcharge tax-deductible against rental income?
Not confirmed. The consultation does not mention it and HMRC has said nothing. Council tax you pay on a let property, for example during a void, is an allowable expense, and a charge that arises only because you own a property you let looks like a cost of the rental business. But until HMRC says so, plan for both outcomes. The difference is large for an additional-rate landlord, because property income will be taxed at 47% at that level from April 2027 (see the 2027 property income tax changes).
Worked example: a £2.2m flat in Wandsworth
Say you own a leasehold flat in Wandsworth on a 125-year lease, valued at £2.2 million in 2026 and let at £6,500 a month (£78,000 a year). It sits in council tax Band F, which is common for £2m flats in London because bands still rest on 1991 values.
- Ordinary council tax: Wandsworth's Band D is £1,028 for 2026/27, so Band F (13/9 of Band D) is about £1,485 a year. Your tenant pays that while the flat is let (the Band D table by council).
- The surcharge: the £2m to £2.5m band, so £2,500 a year from April 2028, then uprated by CPI. You pay that, let or empty.
The surcharge alone is bigger than the whole council tax bill on the flat. Against the rent, it takes 3.2% of the gross. Against the property's value, it trims the gross yield from 3.55% (£78,000 / £2.2m) to 3.43% (£75,500 / £2.2m).
The after-tax cost depends on the unanswered deductibility question. For an additional-rate individual landlord in 2028-29:
| If deductible | If not deductible | |
|---|---|---|
| Surcharge | £2,500 | £2,500 |
| Income tax saved at 47% | £1,175 | £0 |
| Net cost to you | £1,325 | £2,500 |
For a company paying corporation tax at 25%, a deductible surcharge would cost £1,875 net. Run your own yield before and after the charge in the rental yield calculator.
Could the threshold drop to £1.5 million?
It has been reported, not confirmed. In July 2026 the Mail on Sunday reported that Andy Burnham, now Prime Minister, might lower the threshold to £1.5 million, and Tax Policy Associates estimated that would roughly double the number of homes caught. The government has not said so, and the next point it could change is the Budget on Wednesday 28 October 2026, confirmed by Chancellor John Healey on 31 July (GOV.UK).
How a lower band would be priced is unknown, so do not model a specific figure. If you own a let in the £1.5m to £2m range, treat a charge of around £2,500 a year as a stress case, not a forecast.
What should a landlord do now?
- Check which properties are plausibly over £2m at 2026 values. Use recent sold prices for comparable homes, not the figure you paid or an agent's optimistic appraisal.
- Keep valuation evidence from 2026. Condition reports, floor plans and comparable sales will matter if you need to challenge the draft list in late 2027.
- Budget for it as a fixed annual cost from 2028-29. It is per property, payable every year, with no deferral for let homes.
- Confirm who the legal owner is. Long leaseholder, freeholder, joint owners or company: that is who gets the bill.
- Do not restructure for it alone. Moving a £2m property into a company to manage a £2,500 charge would trigger stamp duty and capital gains tax many times larger.
This is general information, not tax or financial advice. The surcharge's final design will follow the government's consultation response, so check GOV.UK or speak to a qualified adviser before acting.
