There has been a fresh development in the Government’s plans for a new tax on higher-value residential property, with reports that the threshold could be lowered from £2 million to £1.5 million.
The levy, announced in last November’s Budget, is currently planned to apply to properties worth more than £2 million from April 2028. Under the existing proposals, affected property owners would pay between £2,500 and £7,500 a year, depending on the value of their property.
Whilst no decision has yet been announced that the threshold will be lowered, the Government is now considering whether to extend the charge to properties worth more than £1.5 million.
What is the High Value Council Tax Surcharge?
The High Value Council Tax Surcharge is a new annual charge on owners of higher value residential properties in England.
Under the Government’s current plans, it will apply from April 2028 to properties valued at £2 million or more, in addition to the existing Council Tax bill. The Government’s aims for the reason for the surcharge are to ensure owners of the most valuable properties contribute more towards local services.
The proposed charges are:
The Government expects fewer than 1% of properties across England to be affected by the surcharge under the current proposals.
Why is the £1.5 million Threshold under Discussion?
The Government is under pressure to raise additional revenue, and lowering the threshold would bring many more properties within the scope of the proposed charge.
According to the latest reports, reducing the threshold to £1.5 million could more than double the number of properties affected, potentially bringing around 271,000 homes into the charge based on current property values. Experts have suggested that lowering the threshold could raise an additional £800 million a year.
However, these figures relate to the reported proposal rather than the current proposal for properties worth £2 million or more. It covers how those properties would be identified and valued, how the surcharge would be administered and collected, and arrangements for appeals and support for owners who may have difficulty paying.
Could this Threshold Affect Property Decisions?
Any additional annual cost associated with owning a property could be a consideration for homeowners when deciding whether to remain in their current property, move home or set an asking price. In particular, it raises questions for owners of properties with values close to the potential tax threshold.
If the threshold were reduced to £1.5 million, properties around this level could potentially become more sensitive to changes in valuation. However, until the Government confirms whether the threshold will change, it is too early to say exactly how this would affect individual properties or the wider market.
The Government’s current proposals provide for properties to be valued for the purposes of the surcharge, with the Valuation Office Agency responsible for determining which properties fall within its scope. The Government has also proposed a five-year revaluation cycle.
What is the Government’s Current Position?
For now, the confirmed position remains a £2 million threshold. The Government’s consultation on the High Value Council Tax Surcharge set out proposals for a charge on properties valued at £2 million or more, with the new surcharge due to begin in April 2028. There may be further announcements at the Government’s forthcoming fiscal events, but until then, the existing £2 million threshold remains the basis of the published policy.
What Should Homeowners Do Now?
The Government’s plans are still being developed, and the final details of the High Value Council Tax Surcharge will determine exactly how the charge will operate. What is clear is that property taxation continues to be an important consideration for homeowners, landlords and anyone thinking about moving home. An up-to-date property valuation may assist property owners wishing to plan ahead for the potential changes.
At Mackenzie Smith, we continue to follow changes affecting the property market closely. If you are considering selling, buying or letting a property and would like to discuss the current market in the local area, our teams are always happy to help.
Please feel free to contact your nearest office, find the estimated value of your property, on our instant valuation tool, here, or book an expert in-person valuation, here.
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