The mansion tax under discussion is essentially an annual charge aimed at owners of residential property valued at higher than average. Current commentary suggests that homes valued at £2 million or more, or in some earlier suggestions, possibly from £1.5 million upwards, could face an annual levy on the portion of value above the threshold.
Other versions of the proposal include adjusting the top council tax bands to capture more revenue from the most expensive homes, rather than creating a separate tax altogether.
There is also speculation that existing Private Residence Relief (which usually protects your main home from capital gains tax) could be limited or tapered for homes above a certain value.
Why now?
With public finances under pressure, property taxation is viewed as one route for raising revenue without increasing income tax or VAT.
At the same time, long-term house price growth, particularly in London and the South East, means more homes sit comfortably above the potential threshold than in previous years.
Who would be impacted?
If set around £2 million, estimates suggest roughly 100,000 to 150,000 properties in the UK would be affected. However, within that group the effects may vary.
Homeowners in London and the South East are the most likely to fall within scope. There is concern that some owners may be “asset-rich but cash-poor”, holding valuable property but without the income to comfortably meet an annual charge.
Those close to the threshold might still feel indirect effects through shifts in buyer behaviour or market activity.
Potential costs and implications
No definitive figures have been confirmed, but if the tax is based on a percentage of the property value above the threshold, annual charges for some households could be significant.
If Private Residence Relief were reduced for high-value homes, owners who later sell could face substantial capital gains tax bills.
Wider ripple-effects
A tax aimed at high-value homes could have broader consequences.
What should homeowners do now?
Although the details are not yet settled, it may be sensible for those with higher-value homes to take steps with the following;
If you’re a local homeowner and you’re thinking of selling, we’ll be happy to help. Click here for an expert, no-obligation valuation and let us know if you would like us to refer you to one of our trusted partners for independent financial advice.
Stay up to date with the latest property news, expert insights, and valuable tips — sign up for our newsletter to receive information directly to your inbox.
Δ
